The short answer: if you are a sole trader or landlord with qualifying income above £50,000, Making Tax Digital for Income Tax became compulsory for you from 6 April 2026, and your second quarterly update was due by 7 November 2026. A quarterly update is not a tax return, you do not need to ring HMRC to check it arrived, and an ordinary spreadsheet can still be used if it is digitally linked to bridging software. Here are the five misunderstandings we hear most often, answered in plain English.
Making Tax Digital for Income Tax has been phased in gradually, and each new wave of taxpayers tends to repeat the same handful of mistakes about what it actually asks of them. With the second quarterly update deadline just passed, now is a good time to set the record straight.
1. What is Making Tax Digital for Income Tax?
It is HMRC's new way of doing Self Assessment for sole traders and landlords. Instead of one tax return a year, you keep digital records of your self employment and property income and expenses using software that works with Making Tax Digital, send HMRC four short summaries a year called quarterly updates, and then submit your tax return by the usual 31 January deadline.
2. Does this actually apply to me?
It depends on your qualifying income, which is your total turnover from self employment and property combined, before expenses, based on the tax return you submitted for an earlier year. The rules are phasing in gradually:
● Qualifying income above £50,000 for the 2024 to 2025 tax year: Making Tax Digital for Income Tax became compulsory from 6 April 2026.
● Qualifying income above £30,000 for the 2025 to 2026 tax year: it becomes compulsory from 6 April 2027.
● Qualifying income above £20,000 for the 2026 to 2027 tax year: it becomes compulsory from 6 April 2028.
If you have both a self employment and a rental property, HMRC adds the two together. A sole trader earning £25,000 with a rental property earning £30,000 has £55,000 of qualifying income, and is caught by the current £50,000 rule even though neither business alone reaches it.
If your qualifying income is £20,000 or less, you are automatically exempt for now and continue with ordinary Self Assessment. Other exemptions exist, including for people who are digitally excluded, and some need an application.
3. What actually happened on 7 November 2026?
Sole traders and landlords already within Making Tax Digital for Income Tax had to send their second quarterly update to HMRC by Saturday 7 November 2026, covering income and expenses from 6 April to 5 October, or 1 April to 30 September for those using calendar quarters. The next two deadlines for this tax year are 7 February 2027 and 7 May 2027.
If you missed it, you can still send it, and HMRC is not charging penalty points for a late quarterly update during the 2026 to 2027 tax year. Send it as soon as you can.
4. Myth: a quarterly update is the same as a tax return
No. A quarterly update is a short summary of your income and expense totals for each business, sent through your software. HMRC does not see the detail of individual receipts or invoices at this stage, there is no tax calculation, and nothing is paid at this point. Your overall tax position is only worked out when you submit your tax return for the full year, by the usual 31 January deadline.
5. Myth: you need to ring HMRC to check your update was received
You do not need to call or use webchat to confirm an update has gone through. You can check your submission history at any time in your HMRC online account or through your software. If you already completed your first update back in August, there is no need to recheck that one either.
6. Myth: you need specialist accounting software, and spreadsheets will not do
Recognised software ranges from simple products built for sole traders and landlords through to more advanced packages, and some options are free. If you already use a spreadsheet, you can keep using it, provided it is digitally linked to bridging software rather than figures being copied and pasted across by hand.
7. Myth: a mistake in an earlier quarterly update means you have to resend it
If you spot an error after an update has gone in, you correct the digital record in your software, and the correction is reflected in your next quarterly update. You do not need to go back and resend an earlier one.
8. What records do I actually need to keep digitally?
You need digital records of your self employment income, such as sales and fees, and your property income, such as rent, along with the related expenses, each with an amount, a date and a category. You still need to keep your underlying paperwork too, such as bank statements and invoices, and everything should be kept for at least five years after the 31 January deadline for the relevant year.
9. What happens if I miss a deadline?
For the 2026 to 2027 tax year, there are no penalty points for a late quarterly update, although points still apply to a late tax return. From the 2027 to 2028 tax year onwards, a missed quarterly update or tax return deadline earns one penalty point, and reaching four points brings a £200 penalty, with further £200 penalties for each deadline missed after that. Points are removed after a period of on time submissions. Late payment of tax itself is dealt with separately, and interest runs from the day a payment is late.
10. Do I still need to submit a tax return at the end of the year?
Yes. Making Tax Digital replaces the old way of reporting day to day income and expenses, not the annual tax return itself. You still need to add any other income, such as savings interest or dividends, check everything is correct, and submit your tax return by 31 January following the end of the tax year, in the same way as before, just through your Making Tax Digital software rather than the old online form.
A few quick questions
What if my income is just under the threshold? HMRC reviews your Self Assessment return each year, and will write to you if your qualifying income puts you over the threshold for the following year. It remains your responsibility to check this yourself rather than wait for a letter.
What if I am in a partnership? Partnerships are not currently required to use Making Tax Digital for Income Tax, although this is expected to change at a later date.
What if I have more than one rental property? All of your property income is added together as one business for Making Tax Digital purposes, and a joint letting can be reported with income only in an early update, with the expenses added when you send your final update of the year.
How Kubed Solutions can help
Kubed Solutions is an ICAEW regulated practice that already supports food, drink, FMCG and ecommerce founders with day to day bookkeeping, so moving onto Making Tax Digital for Income Tax is a natural extension of that, rather than a separate project. We can check whether your qualifying income brings you into the current rules, help you choose software that fits how your business actually works, and manage your quarterly updates for you if you would rather hand that over.
Book a free 30 minute consultation
Official guidance: Find out if and when you need to use Making Tax Digital for Income Tax, Send quarterly updates and Penalties for Making Tax Digital for Income Tax.
This article is general information, not advice for your specific circumstances. Making Tax Digital for Income Tax is being phased in gradually and guidance continues to be updated, so please check the linked GOV.UK guidance or speak to us before acting.