Making Tax Digital for income tax applies to individuals, so sole traders and landlords registered for self assessment. Limited companies are outside it.

HMRC works from qualifying income, which is total income from self-employment and property before any expenses come off. Turnover, in other words, not profit. A landlord with two properties and a consultancy sideline adds both together.

The thresholds phase in, based on the tax return you filed for the year before:

• Qualifying income over £50,000 for 2024 to 2025: in scope from 6 April 2026.
• Over £30,000 for 2025 to 2026: in scope from 6 April 2027.
• Over £20,000 for 2026 to 2027: in scope from 6 April 2028.

Partnerships come in later and HMRC has not set the date. There are exemptions, including for people who are digitally excluded, and you have to apply rather than assume.

One detail worth knowing. From September 2026 HMRC began signing up people who should be in scope for 2026 to 2027 and had not signed themselves up. Being enrolled by HMRC without noticing is a poor way to discover the obligation exists.

A quarterly update is a summary of income and expenses for a three month period, sent to HMRC through recognised software. It is not a tax calculation and nothing gets paid on the back of it.

The first period for the April 2026 group ran from 6 April to 5 July 2026, with a filing date of 7 August. HMRC’s own figures put more than 864,000 sole traders and landlords in that first wave.

Once the update is in, the software shows an estimate of the tax position for the year so far. That estimate is only as good as the bookkeeping behind it, and it takes no account of anything that sits outside the business, so treat it as a rough indication rather than a number to plan around.

The self assessment return has not gone anywhere. The 31 January deadline still stands, the final declaration still has to be made, and payments on account still land in January and July. Four extra filings a year, then, on top of everything that was already there.

HMRC is not applying penalty points for late quarterly updates in the first year, 2026 to 2027. Late returns and late payment still carry penalties as usual.

Accountants had a rough July and August. Reporting on AccountingWEB described logins failing, agent authorisations not coming through, and different software packages behaving differently once the filing window opened.

A lot of the confusion was about the basics. Whether to report on standard quarters or calendar quarters. Whether cash basis or accruals figures were going in. How the quarterly numbers would eventually reconcile to the year-end return. One recurring argument was whether the quarter election belongs to the taxpayer or to each separate business, with the software allowing one thing and the legislation appearing to say another.

Then there was the confirmation gap. People submitted, and had no clean way of proving HMRC had marked the job as done.

An ABAB survey of 10,195 businesses and agents in April 2026 found many seeing no benefit from MTD and higher compliance costs. That is survey opinion, not official statistics, but it matches what we heard.

None of this makes the rules go away. It does mean that if you are in a later wave, signing up early and filing a quarter voluntarily is cheaper than learning it live.

Limited companies sit outside Making Tax Digital for income tax. Corporation tax is not part of this rollout, and your company accounts and CT600 carry on as they are.

The catch is that the rules apply to you as an individual, not to your company. Plenty of directors have income that never touches the company payroll:

• A rental property, or a former home now let out.
• Consultancy invoiced personally before the company existed, or alongside it.
• A second trade run as a sole trader for a client who will not deal with a company.

Dividends and salary from your own company do not count towards qualifying income. Rent and sole trader turnover do, gross, before costs. Two modest properties and a small amount of personal invoicing can clear £30,000 of qualifying income without the profit looking like anything much.

This is the kind of thing the set-up review is for. When a client joins, I go through the structure, the VAT scheme, salary and dividends and the software, and personal income outside the company gets looked at too. It is usually where the surprise is hiding.

If you think a later threshold will catch you, the work is mostly preparation rather than filing.

Start with the arithmetic. Take the last tax return you filed and add up self-employment turnover and property income before expenses. That figure, against the threshold for that year, tells you whether you are in and when.

Then look at the bookkeeping. Quarterly reporting punishes anyone who does their records in one sitting in December. If receipts and rent statements go in monthly, the update is a short job. If they do not, it is four annual panics instead of one.

Check the software next. It has to be recognised by HMRC for MTD for income tax, and your accountant has to be authorised as your agent for it, which is a separate authorisation from the one covering self assessment. That authorisation step caught a lot of people out in the summer.

Last, if the personal trading income is the bit dragging you into this, it is worth asking whether it should be inside a company at all. That is a tax question with a real answer, and the answer depends on your numbers rather than on a rule of thumb.