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If you are a sole trader or landlord with turnover above £50,000, the most important date in your calendar right now is Friday 7 August 2026. That is when your first quarterly update under Making Tax Digital for Income Tax is due.
HMRC says more than 864,000 sole traders and landlords are in scope from April 2026. The worrying part is how many are not yet ready. A Tide survey of 500 qualifying sole traders and landlords, reported in July, found around one in four had still not signed up — and 22% did not know the 7 August deadline existed at all. Earlier figures reported by Accountancy Daily showed just 303,000 people registered against a mandated population of 864,000.
If you are in that group, this article explains what has changed, what you actually have to do, and how quickly you need to move.
What Making Tax Digital for Income Tax actually is
Making Tax Digital (MTD) for Income Tax is not a new tax. It is a new way of reporting the income you already declare.
From 6 April 2026, if your combined gross income from self-employment and property was more than £50,000 in the 2024/25 tax year, you must:
- Keep digital records of your business and rental income and expenses, using HMRC-recognised software.
- Send HMRC four quarterly updates a year — short summaries of income and expenses, not tax returns.
- Submit a final declaration after the tax year ends, which replaces the Self Assessment return you are used to.
Two points cause the most confusion, so it is worth being blunt about them.
“Combined gross income” means turnover, not profit. HMRC looks at total receipts before you deduct a single expense. A landlord with £30,000 of rents and a consultancy turning over £25,000 is caught at £55,000, even if profit after costs is a fraction of that.
Quarterly updates are not four extra tax returns. As HMRC’s MTD deputy director Jonathan Hawkes has put it, “There is only one tax return. MTD does not change the number of tax returns.” A quarterly update is a summary of totals by category. HMRC says it takes minutes through compatible software.
The dates that matter
Your first quarterly update covers 6 April to 5 July 2026 and is due by 7 August 2026. If you have elected to use calendar quarters, it covers 1 April to 30 June 2026, with the same filing date.
For the rest of the 2026/27 tax year:
| Quarter | Period covered | Deadline |
|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 August 2026 |
| Q2 | 6 Jul – 5 Oct 2026 | 7 November 2026 |
| Q3 | 6 Oct – 5 Jan 2027 | 7 February 2027 |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 |
Your Self Assessment return for 2025/26 is unaffected and is still due by 31 January 2027. Nothing about MTD changes that. Your first final declaration under MTD, covering 2026/27, will be due by 31 January 2028.
What happens if you miss 7 August
Here is the nuance that is being widely misread as “it doesn’t matter yet”.
HMRC has confirmed it will not issue penalty points for late quarterly updates during the first year. That is a genuine easement, and it is sensible of HMRC to offer it.
But from the 2027/28 tax year, a points-based system applies: one point per missed deadline, and at four points a £200 penalty, with a further £200 for each subsequent miss.
Late payment penalties are a separate matter and have not been switched off. Under the current regime, tax unpaid after 15 days attracts a 3% charge, a further 3% applies at 30 days, and a 10% annual rate accrues daily after that. There is a first-year easement for those newly mandated in April 2026 — the day 15 charge is waived, giving you until day 30 — but interest still runs throughout, currently at the Bank of England base rate plus four percentage points. The 3% rates rise to 4% from April 2027.
So the honest position is this: missing 7 August will probably not cost you a penalty this year. What it will cost you is far more expensive in practice — because the problems that stop you filing in August are exactly the problems that will still be there in November, February and May, only bigger. Three quarters of unreconciled bank transactions is a very different job from three months’ worth.
The three things that catch people out
1. Signing up is not automatic. HMRC does not enrol you. You, or your accountant acting for you, must sign up through GOV.UK. To do it you need to be registered for Self Assessment and have filed a return in the last two years. If your details do not match HMRC’s records, the sign-up can fail — and sorting that out takes days, not minutes.
2. Your spreadsheet may not be enough. Digital records must be kept in HMRC-recognised software. A spreadsheet can still work, but only with bridging software that connects it to HMRC. If you currently keep a paper cashbook or a shoebox of receipts, that approach has now ended.
3. Exemptions are narrower than people hope. Some people are automatically exempt — those with qualifying income of £20,000 or less, trustees, personal representatives of someone who has died, and certain others. You can also apply if you are genuinely digitally excluded because of age, disability, location or religious belief. But this is not a general opt-out for people who simply find it inconvenient. Each application is decided on its facts, takes time to process, and practitioners report that a significant proportion are refused. You cannot assume an exemption will be granted and stop there.
If you are behind, do this today
You can still be compliant by 7 August if you act now.
- Check whether you are in scope. Look at your 2024/25 return and add together turnover from self-employment and gross property income. Over £50,000 means you are in.
- Sign up with HMRC, or ask your accountant to do it for you. Do this first, because everything else depends on it.
- Choose recognised software. HMRC publishes a list on GOV.UK. Several providers and business banks offer free or low-cost options for straightforward affairs.
- Get April to July reconciled. This is the real work. If your bookkeeping is three months behind, that is the gap to close this week.
- Diarise 7 November now. The second quarter is already three weeks old.
Why this is worth getting right
The threshold falls to £30,000 in April 2027 and £20,000 in April 2028, so this is not a problem that goes away. Businesses that get their systems working properly this year will find the following two years straightforward. Those who leave it will be doing the same panicked catch-up four times a year instead of once.
There is an upside too. Quarterly figures mean you can see an estimated tax position throughout the year rather than discovering it the following January. Used well, that makes cash flow planning far easier.
How Jermyn & Co can help
At Jermyn & Co Chartered Accountants we are already filing quarterly updates for clients across a range of trades and property portfolios. We can confirm whether you are in scope, complete your HMRC sign-up, set up software that suits how you actually work, bring your records up to date, and file on your behalf.
If 7 August has crept up on you, there is still time — but not much.
Book a free MTD readiness call. We will tell you honestly where you stand and what needs doing. No obligation, no jargon.
This article is for general information and does not constitute advice for your circumstances.