Making Tax Digital for Income Tax is now in effect, and the first quarterly update deadline is fast approaching. If you are a sole trader or landlord in Gravesend with income above the qualifying threshold, this is a change you cannot afford to overlook. This article sets out exactly who is affected, what is required, and what you should be doing right now to stay compliant and avoid penalties.
What is Making Tax Digital for Income Tax
Making Tax Digital for Income Tax, often referred to as MTD for ITSA, is HM Revenue and Customs’ initiative to modernise the way that self employed individuals and landlords record and report their income. Rather than submitting a single annual Self Assessment return, affected taxpayers must now keep digital records throughout the year and send quarterly updates to HMRC using compatible software.
It is important to understand that a quarterly update is not the same as a tax return. These updates simply provide HMRC with summary totals of income and expenses for the relevant period. They do not involve tax calculations or adjustments, and no tax becomes due at the point of submission.
Who needs to comply from April 2026
From 6 April 2026, Making Tax Digital for Income Tax became mandatory for individuals who meet all of the following conditions:
- You are registered for Self Assessment as a sole trader, a landlord, or both
- You receive income from self employment, property, or a combination of the two
- Your total qualifying income exceeded £50,000 in the 2024 to 2025 tax year
Qualifying income refers to your gross income before expenses, so many taxpayers who assume they fall below the threshold may in fact be caught by these rules once their turnover is properly reviewed.
Those with lower qualifying income should not assume they are exempt indefinitely. The threshold will fall to £30,000 from April 2027 and to £20,000 from April 2028, bringing a much wider group of Gravesend sole traders and landlords into scope over the coming years.
If you hold both a sole trader business and a rental property, please note that each source of income must be reported separately. A landlord who also runs a small business will need to submit two distinct streams of quarterly data rather than one combined figure.
The 7 August deadline explained
For taxpayers using standard quarterly periods aligned with the tax year, the first update covers income and expenses from 6 April 2026 to 5 July 2026, and this must be submitted to HMRC by 7 August 2026. Those using calendar quarter periods instead report for 1 April 2026 to 30 June 2026, with the same submission deadline of 7 August 2026.
The remaining quarterly deadlines for the 2026 to 2027 tax year follow at regular intervals: 7 November 2026, 7 February 2027, and 7 May 2027. After all four quarterly updates have been submitted, a Final Declaration must be completed to confirm your figures and to include any additional taxable income, such as interest, dividends, or capital gains. For most people who joined the scheme in April 2026, this Final Declaration will be due by 31 January 2027.
It is worth stressing that Making Tax Digital changes how often you report to HMRC, and not when you actually pay your tax. Payment dates remain unchanged, with balancing payments still due on 31 January and payments on account still due on 31 July where applicable.
What happens if you miss the deadline
HMRC has confirmed that no penalty points will be issued for late quarterly updates during the first mandatory year, which offers some breathing room for those still adjusting to the new system. However, this relief should not be treated as an invitation to delay. From later tax years, HMRC operates a points based penalty regime. Each missed quarterly update or tax return deadline results in a penalty point, and once four points have accumulated, a fixed penalty of £200 is charged, with a further £200 charged for every subsequent missed deadline.
Building good habits now, while the pressure is lower, will place you in a far stronger position once the penalty regime takes full effect.
What Gravesend sole traders and landlords should do now
Confirm whether you are affected. Review your gross income for the 2024 to 2025 tax year against the £50,000 threshold. Do not rely on an assumption that HMRC will simply notify you. While HMRC does write to taxpayers it believes are affected, the legal responsibility to check and comply sits with you.
Choose compatible software. You will need software that works with Making Tax Digital in order to keep digital records, prepare quarterly updates, and submit your Final Declaration. Spreadsheets may still be used in some cases, provided they are linked to bridging software that can communicate directly with HMRC.
Get your records in order immediately. If your first quarterly period covers April to June 2026, that period has already closed, so any gaps in your digital record keeping need to be addressed without delay. Separate business and personal transactions cleanly, and ensure income and expenses are categorised correctly from the outset.
Plan ahead if you are not yet affected. If your income is currently below £50,000 but is likely to approach the £30,000 or £20,000 thresholds coming into effect in 2027 and 2028, it is sensible to prepare your systems well in advance rather than facing a rushed transition later.
Speak to your accountant. If you have given your accountant authority to act on your behalf, they can manage your quarterly submissions and Final Declaration for you, meeting all deadlines within the same overall timetable.
How we can help
At Gravesend Accounting, we are already supporting local sole traders and landlords through this transition, from confirming whether the rules apply to you, through to setting up compliant software and managing your ongoing quarterly submissions. With the first deadline now only weeks away, early action will save considerable stress later in the year.
If you are unsure whether Making Tax Digital for Income Tax applies to you, or you would like help getting your records ready before 7 August, please get in touch with our team.
This article reflects HMRC guidance current as at July 2026. Rules and thresholds may be subject to further change, and readers should seek personalised advice for their own circumstances.
