Making Tax Digital for Income Tax from April 2026

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Who has to use it, and when

GOV.UK says you need to use Making Tax Digital (MTD) for Income Tax if you are a sole trader or landlord registered for Self Assessment, you get income from self-employment or property (or both), and your qualifying income is over the threshold:

Qualifying income is your total income from self-employment and property before expenses (turnover), based on the previous tax return. GOV.UK lists income that doesn’t count, including employment (PAYE), your share of a partnership’s profit, dividends, the State Pension and private pensions. Partnerships aren’t in MTD yet — GOV.UK says the timetable will be set out later.

HMRC wrote to people it identified from their 2024 to 2025 returns, but GOV.UK says it is still your responsibility to check, letter or not. From September 2026 HMRC started signing up people who need to use it for 2026 to 2027 and haven’t done so.

People with qualifying income of £20,000 or less are automatically exempt, and there are other exemptions, including one you can apply for if you’re digitally excluded. Exempt people carry on with Self Assessment as normal. Once in MTD, GOV.UK says you can opt out if your qualifying income stays below the threshold for 3 tax years in a row.

What you send

• Digital records of your self-employment and property income and expenses, kept in compatible software.
• Quarterly updates — summaries, not tax returns. Each one is cumulative from the start of the tax year. The standard deadlines are 7 August, 7 November, 7 February and 7 May.
• A tax return by 31 January after the tax year, through your software. GOV.UK now calls it a "tax return" throughout.

Payment dates don’t change. For the 2026 to 2027 tax year, GOV.UK says there are no penalties for missing a quarterly update deadline. Late tax returns under MTD earn penalty points, with a £200 penalty when you reach 4 points. The old penalty rules still apply to your 2025 to 2026 return.

Losses under MTD

GOV.UK’s MTD guidance says relatively little about losses. After your fourth quarterly update you make year-end adjustments in the software — such as claiming capital allowances, which can create or increase a loss — and then complete your tax return by reporting any losses you have, adding other income and gains, and submitting it.

HMRC’s helpsheet HS227 confirms that, under MTD, you make loss claims and adjustments through the software instead of the Self Assessment boxes. The reliefs themselves and their time limits don’t change — see self-employed losses and rental property losses.

We couldn’t find GOV.UK guidance on exactly how brought-forward or carried-back losses are entered in MTD software, so check with your software provider. GOV.UK says HMRC can’t answer technical questions about software.

Corrections and refunds under MTD

GOV.UK says you change a submitted MTD tax return through your software, within 12 months of the submission deadline. A refund can’t be claimed in the return — you request it through your HMRC online services account.

Questions people ask

Does Making Tax Digital change how losses work?

The reliefs and their time limits are the same. What changes is how you claim: under Making Tax Digital for Income Tax you report losses and make claims through your compatible software when you complete your tax return, rather than in the Self Assessment boxes.

Sources

Checked 4 October 2026 for the 2026/27 tax year. We read these primary sources for this guide:

1. GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax (gov.uk)
2. GOV.UK: Work out your qualifying income for Making Tax Digital for Income Tax (gov.uk)
3. GOV.UK: Making Tax Digital for Income Tax for sole traders and landlords — step by step (gov.uk)
4. GOV.UK: Use Making Tax Digital for Income Tax — Send quarterly updates (gov.uk)
5. GOV.UK: Use Making Tax Digital for Income Tax — Adjust your self-employment and property income (gov.uk)
6. GOV.UK: Use Making Tax Digital for Income Tax — Submit your tax return (gov.uk)
7. GOV.UK: Find out if you can get an exemption from Making Tax Digital for Income Tax (gov.uk)
8. GOV.UK: Penalties for Making Tax Digital for Income Tax (gov.uk)
9. HMRC helpsheet HS227: Relief for trading losses (2026) (gov.uk)

Contains public sector information licensed under the Open Government Licence v3.0. This guide adapts and summarises that information in our own words. taxloss.co.uk is an independent guide. It is not affiliated with, endorsed by or connected to HM Revenue & Customs (HMRC) or the UK Government. Spotted something out of date? Tell us.

More on returns, deadlines & records

• 19Deadlines for loss claimsEvery loss relief has a time limit, and they aren’t all the same. Some run 4 years from the end of the tax year; some only to the first anniversary of the 31 January filing date. Here are the main ones in one place, with the 2026/27 dates.
• 20Where losses go on your Self Assessment returnA plain-English map of the loss boxes on the Self Assessment supplementary pages — capital gains (SA108), self-employment (SA103), partnership (SA104), UK property (SA105) and additional information (SA101). Box numbers are from the 2025–26 forms.
• 21Amending a return or claiming laterForgot to claim a loss? You can usually amend your Self Assessment return within 12 months of the 31 January deadline. After that, many loss claims can still be made by letter within their own time limits — and overpayment relief is available for up to 4 years.
• 23Records and evidence HMRC may ask forTo claim a loss you need to be able to show how you worked it out. What to keep for capital losses, crypto and business losses, how long to keep it, and what HMRC can ask for in a compliance check.
• 24When to get professional helpMany losses are simple enough to claim yourself. Some aren’t — large or complex losses, businesses stopping, partnerships and companies, overseas issues or an HMRC check. Here’s who can help, and how to choose.