My profit is well under the threshold. Am I really in scope?

If your gross income is over the threshold, yes. Qualifying income is turnover before expenses, not the profit you pay tax on, and that distinction pulls in a large number of people who reasonably assumed they were clear. A sole trader invoicing £52,000 with £20,000 of costs has a taxable profit of £32,000 but qualifying income of £52,000, so they were in from April 2026. The rule catches high-turnover, low-margin trades hardest — construction, retail, anything where materials are a big share of the invoice. If you have never checked your gross figure against the thresholds, do that before assuming the answer.

Do I have to pay my tax four times a year now?

No. Nothing about MTD changes when you pay. Your Self Assessment liability is still due by 31 January after the end of the tax year, with payments on account on 31 January and 31 July if they apply to you. A quarterly update is a submission of income and expense totals from your software to HMRC — no money moves. The confusion comes from the word "quarterly" and from the VAT regime, where quarterly returns genuinely do come with a payment. MTD for Income Tax is not that. What it does change is that your figures need to be current four times a year rather than once.

Can I still use a spreadsheet?

Only if it is connected to HMRC through bridging software, and for most people that is more trouble than moving to proper accounting software. The requirement is a digital record that flows to HMRC without being retyped — a spreadsheet sitting on your laptop, however well maintained, does not satisfy it on its own. Bridging software reads the spreadsheet and submits from it, which keeps a familiar workflow but leaves you maintaining two systems and manually keeping the categories aligned. It suits people with unusual record keeping and a strong reason to keep it. For a typical sole trader or landlord, software with a bank feed is less work from the first week.

What happens if I miss the 7 August deadline?

For the 2026–27 tax year, nothing in penalty terms — there are no penalty points for late quarterly updates in that first year. From 2027–28 onwards each missed quarterly update deadline earns one point, and a financial penalty follows once you reach four points. Two caveats worth holding on to. The grace applies to quarterly updates only: penalty points still apply to a late tax return for 2026–27, and late payment penalties apply throughout and get worse the longer the tax is outstanding. And missing an update does not remove the obligation — you still have to send it before you can file the annual return.

I have a full-time job and one rental property. Does this apply to me?

Your employment income is outside MTD entirely — PAYE is unaffected and never counts towards qualifying income. What matters is the gross rent from the property, added to any self-employment income you have. If a single rental brings in £14,000 a year and you have no self-employed work, you are below every threshold including the £20,000 one arriving in April 2028, so MTD does not reach you. Add £9,000 of freelance work and the combined £23,000 puts you in scope from April 2028. Assess it on gross rent before mortgage interest, agent fees or repairs — those are expenses, and expenses do not reduce qualifying income.

Making Tax Digital: what's changing, and when

Making Tax Digital has been announced, delayed and re-phased so many times that plenty of sole traders stopped listening. That was a reasonable response for about eight years. It stopped being one on 6 April 2026, when MTD for Income Tax went live for the first band of people.

There are three dates, three income thresholds, and one detail about how the threshold is measured that catches out more people than the rest of the rules combined. Here is the whole thing, with the dates that actually apply.

What MTD actually means

At its core, MTD means no more paper records and no more spreadsheets kept in isolation. Records are kept digitally, and submissions go through HMRC-recognised software rather than being typed into an online portal by hand. The idea is fewer errors, less duplication, and a tax system that runs closer to real time instead of catching up once a year.

It's a shift in how tax administration works, not a one-off form change. Once you're in scope, digital record keeping becomes the normal way you run your books rather than an exercise you do before a deadline.

The three dates

MTD for VAT came first: every VAT-registered business has been inside it since April 2022. MTD for Income Tax is being phased in by income level:

Qualifying income over £50,000 — started 6 April 2026, tested on your 2024–25 tax return.
Qualifying income over £30,000 — starts 6 April 2027, tested on your 2025–26 tax return.
Qualifying income over £20,000 — starts 6 April 2028, tested on your 2026–27 tax return.

Note the two-year lag built into every line. HMRC checks the return you have already filed to decide whether you start two Aprils later. That means the 2027 group was decided by a return filed by 31 January 2027, and the 2028 group is being decided by the year you are trading through right now. A good year today pulls you in even if next year is quieter.

The detail that catches people out: it's turnover, not profit

Qualifying income means gross income from self-employment and from property, added together, before any expenses. Not profit. Not taxable income. Turnover.

An illustrative example. A self-employed plumber invoices £41,000 in 2025–26 and has £14,000 of costs — materials, van, tools, insurance. His taxable profit is £27,000, comfortably under £30,000, and he assumes MTD is somebody else's problem for now.

It isn't. His qualifying income is the £41,000, which is over the £30,000 threshold, so he is in MTD for Income Tax from 6 April 2027.

The second half of the trap is that self-employment and property stack. Neither has to break the threshold on its own — the combined figure is what counts. Someone with £24,000 of consultancy invoices and £9,000 of rent has qualifying income of £33,000 and is in from April 2027, even though each source on its own looks well clear.

Quarterly updates are cumulative — this is the bit everyone gets wrong

The four standard update periods are not four separate quarters. Each one runs from the start of the tax year, so every update restates the last one and adds the next three months:

6 April to 5 July — due 7 August
6 April to 5 October — due 7 November
6 April to 5 January — due 7 February
6 April to 5 April — due 7 May

Take the plumber into his first MTD year. His August update covers 6 April to 5 July 2027: income £11,200, expenses £3,900. His November update does not cover July to October — it covers 6 April to 5 October, so it might read income £22,600, expenses £7,400. The first quarter's figures are inside it again.

That is genuinely good news. If you got something wrong in August, you do not file an amendment. You fix the record in your software and the November update carries the corrected year-to-date position automatically.

If your accounting period runs 1 April to 31 March, you can elect to use calendar quarters instead and avoid the 5th-of-the-month boundaries entirely.

What doesn't change

Three things people expect to change and which don't:

You do not pay tax four times a year. Nothing leaves your bank account because of a quarterly update. Payment dates are unchanged — 31 January and 31 July, as now.

You still file a Self Assessment return. The quarterly updates are summaries; the annual return and final declaration still happen, still by 31 January after the tax year ends.

HMRC does not see your receipts. An update carries category totals only — turnover and your expense headings. It does not hand over your ledger four times a year. It means the totals have to be right four times a year instead of once.

Penalties: a grace year that is being misread

There are no penalty points for missing a quarterly update deadline in the 2026–27 tax year. That grace is real, and it is worth knowing about.

It is also being widely misread as "MTD doesn't start until next year". It does. The obligation to keep digital records applies from your start date; only the points for late quarterly updates are suspended, and only for that first year. Penalty points still apply to a late tax return for 2026–27, and late payment penalties apply throughout. From 2027–28, quarterly updates carry points too, at a threshold of four points before a financial penalty lands.

What to do about it

Add up your gross income from self-employment and property for the relevant tax year, before expenses. That single number decides everything.
Find your start date against the three thresholds above, or run the MTD checker — four questions, and it gives you your date and every quarterly deadline.
Get MTD-compatible software in place a full quarter early. The people who struggle are not the ones who find the software hard; they are the ones who start using it three weeks before a deadline with nine months of transactions to categorise.
Connect the bank feed and let it run. Once transactions land automatically, a quarterly update takes minutes.

Software already sorted

Every Buzz package includes FreeAgent, which is HMRC-recognised for MTD. Digital record keeping, bank feeds, receipt capture and the submissions themselves are built into how we work with clients, so you're not sourcing and configuring software on top of running the business. If you're VAT-registered, this is already in place.

For the full breakdown of who's affected and what's required, our Making Tax Digital page and the MTD guide go through it in detail. If you're in the first band and want the deadline mechanics specifically, we covered the first quarterly update on 7 August in full.

And if you're not sure which threshold catches you, that's a five-minute conversation rather than a project. It's a much smaller job done calmly in good time than under pressure in the final weeks before April.