What is Making Tax Digital?
HMRC’s biggest change to the tax system in decades — explained in plain English for sole traders and landlords.
The short version
Making Tax Digital (MTD) is HMRC’s programme to move the UK tax system online. For sole traders and landlords, it means replacing your annual Self Assessment tax return with digital record-keeping and four quarterly updates to HMRC each year — plus a Final Declaration at year end.
What actually changes?
Instead of one annual return, you’ll submit a summary of your income and expenses to HMRC four times a year through MTD-compatible software. At the end of the year, you complete a Final Declaration — which replaces your Self Assessment return.
You must keep your business records digitally — in software or a spreadsheet with bridging software — so that your quarterly updates can be submitted directly to HMRC.
Important
MTD does not mean you pay tax quarterly. Your tax payment dates stay exactly the same — 31 January and 31 July. Only your reporting changes.
When does it start?
MTD for Income Tax is being rolled out in three phases:
Phase 1 — April 2026
Sole traders and landlords with gross income over £50,000
Phase 2 — April 2027
Those with gross income over £30,000
Phase 3 — April 2028 (provisional)
Those with gross income over £20,000
What do I need to do?
There are three steps: check whether MTD applies to you, choose HMRC-recognised software, and register through that software. You cannot register directly on the HMRC website — it must be done through your chosen software.