Making Tax Digital for Income Tax: What Devon Businesses Need to Know in 2026
It’s now the middle of 2026, and we are only three weeks away from the first quarter Making Tax Digital for Income Tax submission due date. Unsure of what Making Tax Digital for Income Tax is and if you need to sign up? As a licensed accountant and bookkeeper, here is what you need to know.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD for Income Tax) is the new process by which sole traders and landlords will report to HMRC.
This process requires you to use software to:
1) Create, store and correct digital records of your self-employment and property income and expenses
2) Send your quarterly updates to HMRC
3) Submit your tax return and pay tax due by 31 January the following year
We will go into each of these requirements in more detail.
1) Creating, storing and correcting digital records
To comply with MTD for Income Tax, you will need to create digital records of your self-employment and property income and expenses.
You can either do this through software that:
Creates digital records, or
Connects to your existing records, such as those held in spreadsheets.
If you haven’t used software to manage your record-keeping before, the idea of being required to start could be quite daunting. If this is the case, using software that can connect to a spreadsheet may be a good way to begin digital record-keeping.
Alternatively, it could be a great chance to modernise your bookkeeping process and start using software that can create digital records. It’s probably easier than you think.
Software that creates digital records
This is a type of software that allows you to create records directly within the software by either:
Linking your business bank account to import transactions automatically
Scanning receipts and invoices
Manually entering your income and expenses
These types of software include QuickBooks, Xero, and Sage. These products have strong advertising campaigns, and you may have heard of them. As an accountant and bookkeeper, I have solid experience with all three. They are some of the most popular software options and may be ideal for creating your digital records.
However, QuickBooks, Xero, and Sage may not be suitable for everyone. If your business is specialised, there may be better software for creating digital records.
For example, if you have a property rental business, you may be better off using Hammock for landlords to maintain your bookkeeping and submit your quarterly MTD for Income Tax submissions.
If you have self-employment income and property income, it may be worth getting a QuickBooks and Hammock subscription and linking the two.
It will depend on each individual business what software is needed. As a QuickBooks ProAdvisor, I’d be happy to help advise you if QuickBooks is suitable for your business.
Software that connects to your records
Software that connects to your records is often referred to as bridging software. It can be a good way to transition to digital record-keeping, especially if you are comfortable recording your transactions in a spreadsheet.
This type of software will connect to existing records kept in spreadsheets or other accounting tools.
#GoFile is an example of this type of software, which is suitable for both sole trader income and UK property income.
Hammock for landlords also has a bridging software that connects to your records and is suitable for UK property and foreign property income.
Again, it will depend on each individual business what software is needed. A property rental business in Plymouth will have different requirements from an electrician in Exmouth. To find the software right for you, scroll down to the “How do I find compatible software?” section or reach out to an accountant or bookkeeper for assistance.
Looking for an accountant or bookkeeper?
If you are panicking or have a question about Making Tax Digital for Income Tax, feel free to get in touch. I’d be happy to help you.
How do I find compatible software?
There isn’t an official HMRC piece of software for MTD for Income Tax. However, the gov.uk website has a software finder tool that lists compatible software that meets your needs. To use the software finder tool;
Open the Software finder tool.
Read the information.
Scroll down and click the “Find now” button.
Answer the questions in line with your needs.
Helpful tip: You will likely receive a list of lots of software providers. These will be in a random order, and it may be difficult to know who to choose. You can filter the list further using the checkboxes on the left to try and find the best software for you. If you are still unsure, you can seek out the help of an accountant or bookkeeper.
2) Sending quarterly updates to HMRC
With MTD for Income Tax, four quarterly submissions are due throughout the tax year. For the 2026/27 tax year, these are due on 7 August 2026, 7 November 2026, 7 February 2027, and 7 May 2027. These are not tax returns; a tax return will still be due by 31 January 2028.
The periods these submissions relate to will depend on whether your tax return is on the standard or calendar basis. Whether you choose the standard or calendar basis depends on your accounting period.
Each submission will include self-employment income, property income, and the allowable expenses for the corresponding period.
You should submit your four quarterly submissions through the software that holds your digital records. This process will vary depending on the software you choose.
The following video explains the process when using QuickBooks: https://www.youtube.com/watch?v=Jt9W7z8YBO4
Standard basis
You should use the standard basis if your accounting period already aligns with the tax year (6 April - 5 April). This will be most people.
Note: The standard basis is the default setting for HMRC Self-Assessment and MTD for Income Tax software.
Calendar basis
If your accounting period does not align with the tax year (6 April - 5 April) and instead finishes at the end of the month, the calendar basis may be more appropriate for you.
3) Submitting your tax return
The quarterly MTD for Income Tax submissions do not replace your tax return. You will still need to submit a tax return by 31 January the following year. For the 2026/27 tax year, your tax return would be due by 31 January 2028.
You will still need to submit a tax return because you may have other sources of income. You will also be able to make adjustments.
Do I need to sign up?
You’ll need to sign up for MTD for Income Tax if all of the following apply:
You’re a sole trader or a landlord registered for Self Assessment
You get income from self-employment or property, or both
Your qualifying income is more than the relevant threshold for the tax year
Whether you need to sign up now will depend on your qualifying income.
From 6 April 2026, sole traders and landlords with qualifying gross income over £50,000 will need to comply with MTD for Income Tax, with the first submission due by 7 August 2026. However, even if you have less than £50,000 of qualifying income per year, you will likely still be affected.
From 6 April 2027, sole traders and landlords with qualifying gross income over £30,000 will need to comply with MTD for Income Tax.
From 6 April 2028, sole traders and landlords with qualifying gross income over £20,000 will need to comply with MTD for Income Tax.
You can use a government tool to check if you need to use the service, when you need to start, or if you may be exempt.
To use the checker;
Open the Check if you need to use Making Tax Digital for Income Tax tool.
Answer the questions based on your circumstances.
Helpful tip: If you do not know the answer to any question, a blue link with more information is usually provided.
How do I work out my qualifying income?
You can work out your qualifying income by adding your income from self-employment and property from your last tax return. All other sources of income do not count towards your qualifying income. Note: The qualifying income amount excludes expenses.
The following link on the government website provides additional information: https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax
How do I sign up for MTD for Income Tax?
If you need to use MTD for Income Tax for the 2026 to 2027 tax year, you should sign up now.
Even if you don’t need to sign up yet but will in the future, you can voluntarily sign up for MTD for Income Tax.
To sign up for Making Tax Digital for Income Tax, simply follow this link to the government website https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax. To sign up:
Go to the Sign up for Making Tax Digital for Income Tax page.
Read the information.
Scroll down and click the Sign up now button.
Sign in to HMRC using the Government Gateway or GOV.UK Login you got when you registered for Self Assessment.
Additional information
More information can be found on the government website:
https://makingtaxdigital.campaign.gov.uk
https://www.gov.uk/government/collections/making-tax-digital-for-income-tax
Disclaimer: This article is for general information only and does not constitute personalised tax advice.