Making Tax Digital (MTD) Made Simple - Everything You Need To Know

If you’ve seen “Making Tax Digital” everywhere lately and your brain has filed it under “I’ll deal with this later”… you’re not alone.

MTD has a habit of sounding bigger and scarier than it actually is. So this blog is here to do one job:

Answer your questions clearly, so you stop feeling overwhelmed.

What is MTD, in normal-person language?

Making Tax Digital for Income Tax (MTD ITSA) is HMRC changing how sole traders and landlords report their income tax information.

Instead of everything being pulled together once a year, MTD moves you towards:

keeping digital records (in compatible software)
sending quarterly updates to HMRC
then doing your year-end submission + final declaration

So it’s less “one big annual panic”, more “small check-ins that keep you on track”.

👀 Who does it apply to (and when)?

MTD for Income Tax comes in phases:

From 6 April 2026 if your qualifying turnover (turnover, not profit. So it’s about what comes in before expenses.) from self-employment and/or property is over £50,000(GOV.UK)
From 6 April 2027 if it’s over £30,000 (confirmed rollout) (Making Tax Digital for Income Tax)
Government has also said it intends to extend to those over £20,000 later. (GOV.UK)

HMRC are actively writing to individuals based on the figures in their 2024/25 tax returns. So in theory, if you’ve been mandated into MTD, you should receive a letter confirming it. It is still worth checking yourself though.

🚫 Does this apply to limited companies?

MTD for Income Tax is about individuals who currently do Self Assessment because they’re sole traders and/or landlords. If you run a Ltd company only, this particular change isn’t aimed at you. (GOV.UK)

🧾 What are “quarterly updates” and what do you actually submit?

Quarterly updates are not a full tax return, four times a year.

They are regular updates sent from your software that summarise your income and expenses for that period, for each income source (for example, one business and one rental property). (GOV.UK)

✅ Corrections are easier than you think

If something is missing or wrong, you fix it in your records and it gets reflected going forward. You do not have to resend the original update just because you corrected something later. (GOV.UK)

At the end of the tax year you’ll submit a year-end submission (sometimes called an End of Period Statement) and a final declaration that confirms your total position for the year. (GOV.UK)

📅 What are the quarterly deadlines?

Quarterly updates are due 1 month + 2 days after the end of each quarter. (GOV.UK)

For the first year (2026/27), the standard deadlines are:

Quarter 1 (6 Apr–5 Jul) → 7 Aug 2026
Quarter 2 (6 Jul–5 Oct) → 7 Nov 2026
Quarter 3 (6 Oct–5 Jan) → 7 Feb 2027
Quarter 4 (6 Jan–5 Apr) → 7 May 2027

(Your software will also prompt you, but it helps to know the dates.)

The big worry: “Does this change when I pay tax?”

No — you will not pay 4 tax bills a year.

✅ The main deadline is still 31 January

The deadline for paying your tax is still 31 January (just like now).

And if you currently pay payments on account, those are still typically due 31 January and 31 July, as they are under Self Assessment today. (GOV.UK)

So MTD is about how you report during the year, not moving you onto “four tax bills”.

🧾 When is the year-end deadline?

Your final submission/final declaration deadline remains 31 January after the tax year ends.

Example: for the 2026/27 tax year (6 April 2026 to 5 April 2027), the year-end deadline is 31 January 2028. (GOV.UK)

💷 Penalties: “Will I be fined if I get this wrong?”

HMRC has confirmed a 12-month soft landing from April 2026, meaning penalty points for late quarterly submissions are suspended in that first year (so people have time to adjust). (MoneyWeek)

After that, it works on a points-based system rather than “one late update = instant fine”. (MoneyWeek)

💻 Do I need software? (And what should I use?)

Yes — MTD requires compatible software to keep digital records and send quarterly updates. (GOV.UK)

We recommend Xero for most clients because it’s user-friendly and does the job properly.

Through ChadStone, we can get you set up on Xero from £7 + VAT/month, and we provide free Xero training for clients so you’re not left guessing.

🛠️ What should you do now (so this doesn’t become “April panic”)?

Here’s the calm plan:

1) Work out if you’re likely in scope

If you’re a sole trader/landlord and you’re anywhere near £50k turnover, it’s worth checking now. HMRC also provides a tool to check eligibility/timing. (GOV.UK)

2) Get set up early

This is easier when you’re not trying to learn software at the same time as running your business.

3) Build a simple habit

Little-and-often record keeping beats “one big admin day” every time.

4) Ask before you’re stressed

If you’re unsure whether it applies to you, or how to set it up properly, we can help you get clarity quickly.

🙋 Quick-fire FAQs

“Do I have to do a full tax return every quarter?”
No. Quarterly updates are updates. The year-end submission/final declaration is where the full position is confirmed.

“Will I still pay by 31 January?”
Yes. Your main tax payment deadline is still 31 January.

“What if I have both business and rental income?”
You’ll submit updates for each income source through your software.

👇 What we’re doing throughout March to help

This blog is the “big picture”.

Throughout March, we’ll be sharing bite-sized, simple resources on our company social media pages.

And if you’d rather skip the uncertainty and just get it sorted: contact us now and we’ll help you work out what applies to you and the best next step.

Al, Dave & the ChadStone Team

IN THE MEANTIME, HERE’S SOMETHING FOR YOU…👇

Get the latest finance tips, business hacks, free resources, hilarity, memes and more by joining our quarterly newsletter, ‘Sumthing To Say’ here.
Do you need your accounts taken care of for you? You can Book a Discovery Call here.