I'm employed and I rent out one flat. Am I in MTD for Income Tax?

Only the rental income counts towards the test — your salary is invisible to it, however large. Add up the gross rent before mortgage interest, agent fees or repairs. If that was over £50,000 in 2024/25 you joined in April 2026. Over £30,000 in 2025/26 and you join in April 2027; over £20,000 in 2026/27 and you join in April 2028. A single flat rarely clears £20,000 outside central London, so most employed landlords with one property stay outside the regime and carry on filing an ordinary Self Assessment return each January.

Does Making Tax Digital apply to my limited company?

Not to its corporation tax. MTD for Income Tax applies to individuals with self-employment or property income, so a company's profits and its CT600 are untouched, and there is no MTD for Corporation Tax in force. Two things still catch companies. If the company is VAT registered it has been inside MTD for VAT since April 2019 or April 2022 depending on its turnover then, and must keep digital VAT records and file through compatible software. Separately, you may personally be in MTD for Income Tax through any sole trade or rental income you hold outside the company — your salary and dividends from it do not count towards that test.

Can I still use a spreadsheet?

Yes, but not on its own. A spreadsheet can hold your digital records provided it connects to HMRC through bridging software, and provided data moves from spreadsheet to submission by digital link rather than by someone retyping totals. In practice this is the most fragile way to comply: every additional property or trade adds another set of cumulative figures, and any manual copy-and-paste between files breaks the digital link requirement. Most owners who start with a spreadsheet and a bridging tool move to proper accounting software within a year or two, usually after a quarterly update takes longer than the work it was reporting on.

Do quarterly updates mean I pay tax four times a year?

No. Payment dates have not changed. The balancing payment for a tax year is still due on 31 January after it ends, with payments on account on 31 January and 31 July where they apply. Quarterly updates are reporting only: they carry no payment and generate no bill. What they change is visibility. Because you are submitting year-to-date figures every three months, you can see where your liability is heading long before January, which turns putting money aside into a plan rather than a shock. That is the one genuine upside of the regime for most owners.

I have a trade and two rental properties. How many updates is that?

Fewer than people fear, because reporting is by business rather than by property. Your self-employment is one source, and all your UK residential lettings together form a single UK property business, so two flats do not mean two sets of figures. In that example you send two updates each quarter — one for the trade, one for the property business — inside the same submission cycle, each showing cumulative income and expenses for the year to date. Furnished holiday lets, overseas property and a genuinely separate second trade are what add further sources, so map yours before your first quarter rather than during it.

Who actually presses submit — me or my accountant?

Either, and the failure mode is each assuming the other is doing it. An agent authorised for MTD for Income Tax can send your quarterly updates and your final return, but only from records that exist, which means the bookkeeping has to be current before each deadline rather than after it. The arrangement that works is explicit: books up to date by a set date each quarter, agent submits by the 7th, and one named person owns the reminder. Put it in writing when you engage. Deadlines missed in the gap between client and accountant are the most avoidable ones there are.

The Business Owner's Guide to Making Tax Digital

What Making Tax Digital actually means

Making Tax Digital, or MTD, is HMRC's programme to move UK tax reporting onto software. Two things change. You keep your business records digitally instead of on paper or in a standalone spreadsheet, and you send your figures to HMRC through MTD-compatible software rather than typing them into an online form once a year. Reporting stops being a single annual data-entry exercise and becomes something your software does on a schedule.

Be clear about what MTD is not. It is not a new tax. It does not change how much you owe. It does not change what counts as an allowable expense, what rate you pay, or when the tax itself is due. It changes how you record and report the numbers you were always going to report.

Where MTD stands today

Two regimes are now live at the same time, and they catch different people.

MTD for VAT — applies to every VAT-registered business. It reached businesses trading above the VAT registration threshold in April 2019, and all remaining VAT-registered businesses, including those registered voluntarily, in April 2022. HMRC signs businesses up automatically when they register for VAT, so there is nothing to opt into.
MTD for Income Tax — started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The first quarterly update under it fell due on 7 August 2026.

You can be inside both at once. A VAT-registered sole trader turning over £120,000 files quarterly VAT returns under MTD for VAT and quarterly income tax updates under MTD for Income Tax — from the same set of digital records, which is precisely the point of keeping them properly in the first place.

The dates and thresholds, in full

MTD for Income Tax arrives in three waves, each set by the qualifying income on a Self Assessment return you have already filed:

Qualifying income over £50,000 in the 2024/25 tax year — you joined on 6 April 2026.
Over £30,000 in 2025/26 — you join on 6 April 2027.
Over £20,000 in 2026/27 — you join on 6 April 2028.

HMRC works this out from your filed return and writes to tell you. The return roughly two years before your start date is the one that decides it: your 2024/25 return set your April 2026 position, and the 2026/27 return due by 31 January 2028 decides whether you are in from April 2028.

Qualifying income is turnover, not profit

This is the single point owners most often get wrong, and getting it wrong decides whether you are in the regime at all. Qualifying income is gross income before expenses from self-employment and property. It is not your taxable profit.

What counts: self-employment turnover, rental income, and your share of income from jointly owned property. What does not count: employment income taxed through PAYE, dividends, the State Pension, private pensions, and your profit share as an individual partner in a partnership.

Worked example — two owners, two very different answers

Both of the following are illustrative, and both use the rules as they stand for 2026/27.

Priya lets one flat and does freelance design work. The flat brings in £25,000 of rent and her design work turns over £27,000. Her qualifying income is £52,000 — over the £50,000 line, so she is in MTD for Income Tax. Mortgage interest, letting agent fees and her own costs take her combined taxable profit down to about £21,000, but that is irrelevant: the £52,000 is the figure that decides it, not the £21,000.

Dan is an employee on a £80,000 salary, takes £30,000 of dividends from a company he part-owns, and does £14,000 of weekend consultancy as a sole trader. On the face of it he earns far more than Priya. His qualifying income is £14,000 — salary, dividends and partnership shares are all excluded. He is not in the regime now, and only joins from April 2028 if that £14,000 grows past £20,000.

The rule to take away: add up gross self-employment turnover and gross rents, ignore everything else, and compare that total to £50,000, £30,000 or £20,000 depending on the year.

What actually changes in your record-keeping

The practical shift is that a shoebox of receipts, or a spreadsheet you rebuild once a quarter from bank statements, stops being enough on its own. Under MTD you need to:

Keep your business records in a digital format, in software HMRC recognises as MTD-compatible.
Record transactions as they happen, or close to it, rather than reconstructing months of activity from memory at year-end.
Send quarterly updates through that software — for VAT, a quarterly return; for Income Tax, a cumulative year-to-date total of income and expenses for each business and each property source you have.
Keep the trail digital end to end. Where data moves between spreadsheet, bridging tool and submission, it has to move by digital link, not by someone retyping a total into a different box.
Finish the year with a tax return that pulls the quarterly figures together and adds everything the quarters never saw — employment income, dividends, interest, pension contributions, Gift Aid.

Because Income Tax updates are cumulative rather than standalone, a mistake in one quarter is corrected simply by sending the right year-to-date figure in the next one. There is no amendment process to wrestle with.

Your quarterly deadlines

Standard update periods follow the tax year, and each has a fixed deadline:

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

If tax-year dates are awkward against how your bookkeeping already runs, you can elect for calendar update periods instead — 30 June, 30 September, 31 December and 31 March. The four deadlines stay exactly the same. The year is then finished off by your Self Assessment tax return, due by 31 January after the end of the tax year: 31 January 2028 for the 2026/27 year.

Penalties, and the year of grace

HMRC is not applying penalty points for late quarterly updates during the 2026/27 tax year. That is a genuine easement for the first cohort, and it is worth understanding its limits. It covers late updates only — it does not touch late filing of the tax return itself, and it does nothing about late payment, where interest and penalties run as normal. It also does not let you skip the updates: you cannot submit your tax return until the quarterly updates for that year are in.

One practical consequence of cumulative reporting: if you miss 7 August, the update you send by 7 November carries the full year-to-date position and satisfies both quarters. Missing a deadline in the first year is recoverable. Ignoring the regime altogether is not.

Who is exempt, and who only thinks they are

Some exemptions from MTD for Income Tax are automatic, based on what was already on your 2024/25 return. They cover ministers of religion who filed the SA102M page, anyone who claimed qualifying care relief — foster carers and kinship carers — and anyone who had no National Insurance number on 5 April in the previous tax year.

Beyond that, exemption is by application. If you are digitally excluded — through age, disability, location, religious belief or another reason you cannot reasonably use compatible software — you have to call or write to HMRC and be approved. It is not granted on request. Preferring spreadsheets, being busy, or finding the whole thing irritating are not grounds.

You can also leave once you are in, but slowly. Opting out requires your qualifying income to have been below the relevant threshold for three consecutive years, evidenced by the returns and the final update for those years. Someone who joined in April 2026 on the strength of a good 2024/25 could opt out ahead of 2029/30 at the earliest, and only if each of the three intervening years came in under the line.

A readiness checklist you can work through this week

Add up gross self-employment turnover plus gross rents from your latest return. That single number tells you which wave you are in.
Check whether your software is on HMRC's MTD-compatible list, rather than assuming it is because it looks modern.
Turn on bank feeds so transactions arrive automatically instead of being typed in.
Split your records by source now — each trade and each property business reports separately, and untangling one merged ledger later is far more work.
Start capturing receipts digitally. A photo through your accounting app beats a drawer of fading till slips.
Put 7 August, 7 November, 7 February and 7 May in the calendar with a week's warning on each.
Agree in writing who actually presses submit — you or your accountant — so nothing falls into the gap between you.
If you think you qualify for an exemption, apply now rather than at the deadline. Approval is not instant.

How FreeAgent handles it

Every Buzz package includes FreeAgent as standard, and it is HMRC-recognised for MTD. Digital VAT and Income Tax submissions are built in, income and expenses are tracked in real time rather than reconstructed later, bank feeds pull transactions in automatically, receipts can be captured on your phone, and we can support submissions directly through the same software you are already using. Because it is included in every plan, it also saves clients up to £330 a year compared with buying equivalent software separately.

Paired with proper bookkeeping, the effect is that MTD stops being a looming deadline and becomes something that happens quietly in the background, quarter by quarter, because the software and the habits are already in place.

What to do next

If you are VAT registered, you should already be filing under MTD — if you are not certain that you are, that is worth resolving this week rather than at your next return. If you are a sole trader or landlord, work out your qualifying income from the list above and find your start date. April 2027 and April 2028 sound distant, and both are close enough that the record-keeping habits need to start well before them.

Answer four questions in our MTD checker to get your start date and every deadline, have a look at how Buzz handles Making Tax Digital, or book a free discovery call and we will talk through exactly what needs to happen for your business.

The business owner's guide to Making Tax Digital