Digital records are now part of the tax process — not an optional extra at year end.
Britvex helps sole traders, landlords and VAT-registered businesses understand when Making Tax Digital applies, set up compatible software, keep the required digital records and connect quarterly or VAT submissions to the wider accounting and tax cycle.
Income Tax and VAT have different MTD obligations.
The phrase “Making Tax Digital” covers more than one regime. The correct workflow depends on whether you are dealing with self-employment or property income, VAT registration, or both.
MTD for Income Tax
From April 2026, MTD for Income Tax is mandatory for qualifying sole traders and landlords above the relevant income threshold. It requires digital records, quarterly updates and an annual tax return through compatible software.
MTD for VAT
VAT-registered businesses generally need to keep specified VAT records digitally and submit VAT Returns using functional compatible software unless an exemption applies.
The threshold is based on qualifying income — not taxable profit.
HMRC uses qualifying income from self-employment and property to determine when MTD for Income Tax applies. The test is based on gross qualifying income before expenses and tax, using the relevant earlier tax return.
The first mandatory MTD for Income Tax year has already started.
For businesses and landlords within the first mandatory cohort, the digital record-keeping obligation started in April 2026 and the quarterly update cycle is now under way.
Standard-period users start keeping digital records for the 2026–27 MTD tax year.
Deadline for the first quarterly update for standard update periods.
Deadline for the second quarterly update for standard update periods.
Third and fourth quarterly update deadlines.
Deadline for the 2026–27 tax return through MTD-compatible software.
Check → Set up → Record → Submit.
MTD is easier when it is built into the normal accounting process rather than treated as an extra filing task every three months.
Confirm whether MTD applies and from when.
Review qualifying income, income sources, VAT status and any relevant exemption before setting up software.
Choose and authorise compatible software.
Configure the accounting period, income sources and digital workflow needed for the relevant MTD regime.
Create and maintain digital records.
Capture self-employment, property or VAT information inside the compatible software and keep corrections current.
Send quarterly updates, VAT Returns and the annual return.
Use the software to meet the required submission cycle while keeping the same underlying records connected.
A quarterly update is a summary of digital records — not a full tax return.
Every three months, compatible software totals the digital records for each relevant self-employment or property business and sends the required income and expense categories to HMRC.
Choose the workflow first. Then choose the software that supports it.
Threshold alone does not answer every MTD case.
HMRC has automatic and application-based exemptions. Digital exclusion can apply where age, health, disability, religious beliefs or lack of practical internet access make digital compliance unreasonable, subject to HMRC’s rules.
Britvex can help identify whether a client’s facts suggest an exemption should be checked, but HMRC determines exemption applications.
MTD should sit inside the accounting system — not beside it.
The same digital records can support bookkeeping, VAT, landlord reporting, Self Assessment and later year-end work.
Digital tax compliance still needs secure records and professional oversight.
Britvex connects onboarding, digital records, tax work and client communication through a UK practice and secure client portal.
Before you choose software or miss a quarterly update.
Making Tax Digital rules are now live for the first mandatory Income Tax cohort and already apply broadly to VAT-registered businesses.
Who must use MTD for Income Tax in 2026–27?
Relevant sole traders and landlords with total qualifying self-employment and property income of more than £50,000, based on the applicable earlier tax return, are within the first mandatory cohort from April 2026 unless an exemption applies.
What happens to the threshold after 2026?
The threshold reduces to more than £30,000 from April 2027 and more than £20,000 from April 2028 under the current rollout.
What is qualifying income?
HMRC describes qualifying income as gross income from self-employment and property before expenses and tax. The combined qualifying-income rules need to be considered where more than one relevant source exists.
Are quarterly updates the same as a tax return?
No. Quarterly updates are summaries of digital income and expense records for each relevant source. The annual tax return is a separate end-of-year filing through compatible software.
What is the next standard quarterly deadline in 2026–27?
For standard update periods, the second quarterly update is due by 7 November 2026, followed by 7 February 2027 and 7 May 2027.
Does MTD for VAT still apply?
Yes. VAT-registered businesses generally need to keep specified VAT records digitally and file VAT Returns through functional compatible software unless an exemption applies.
Can I be exempt from MTD for Income Tax?
Yes. HMRC has automatic and application-based exemptions, including digital-exclusion cases where digital compliance is not reasonably practicable. The exact exemption route depends on the circumstances.
Tell us your income sources, qualifying income and current software setup.
Britvex can check when MTD applies, help establish compatible digital records, connect quarterly updates or VAT Returns to the bookkeeping and keep the annual tax filing inside the same accounting workflow.