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Making Tax Digital for Income Tax is a new approach that helps customers avoid errors and is designed to make submitting their tax returns easier.

From 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property.

You, or your agent if you have one, will need to use software that works with Making Tax Digital ³Ù´Ç:Ìý

• create digital records of your self-employment and property income and expenses
• send your quarterly updates to HMRC
• submit your tax return by 31 January the following year

This will help you stay on top of your tax affairs and business planning, supporting you to grow your business.

Since April 2022, all VAT-registered businesses have been required to keep digital records and send VAT returns using software that works with Making Tax Digital. It’s now the standard way to manage their VAT.

These businesses have reported benefits, including:

• time saving
• more tax confidence
• improved business operations compared to manual processes

You can read Making Tax Digital case studies from VAT-registered businesses to find out more information.

Take advantage of digital records

With Making Tax Digital for Income Tax, you’ll be able to replace paper-based systems and upgrade your record-keeping. Software that works with Making Tax Digital is designed to be accessible and simple to use, with a wide range of software choices to suit different needs and budgets.

Using this software will support you and your business growth, as you’ll be able to:

• store and transfer all your records securely, so they’re always available
• identify and avoid possible errors early, so you can check and correct them before sending your tax return
• view your up-to-date cash flow to help support your business planning

Some software may also:

• have tailored feedback and prompts, telling you about any tax reliefs and allowances you may be able to claim
• record receipts and invoices as you go — for example, create digital records directly from your bank account and avoid losing paper records

Stay on top of your tax throughout the year 

With Making Tax Digital for Income Tax, you’ll use your digital records to send quarterly updates to HMRC.

Sending quarterly updates will give you a better view of the health of your business and help you estimate your tax bill. Every time you send a quarterly update, you’ll be able to see an updated in-year estimate.

In-year estimates help you to:

• see your predicted tax bill year-round, avoiding any January surprises — this means you can better invest in your business growth
• save time and avoid errors by not having to re-enter information or manually add up invoices
• identify any changes to payments on account you might want to make
• make more informed financial decisions for your business
• get your tax right, avoiding the worry, cost and burden of extra work when things go wrong

Changes to penalties

We’re introducing changes to penalties to support Making Tax Digital for Income Tax. You may already be familiar with these changes if you’re VAT registered.

Late submission penalties

The new late submission penalties are points based. Each time you miss a deadline, you’ll get a penalty point. 

This means you will not face financial penalties if you make a one-off mistake by submitting an update or return late. Financial penalties will only apply if you repeatedly miss deadlines. 

This supports taxpayers who make occasional slip ups and discourages those who repeatedly miss deadlines.

Late payment penalties

New late payment penalties are more proportionate to the amount of tax you owe, and how long it takes you to pay it. This means the quicker you pay, the lower your penalty will be.

How signing up early can help you

You can sign up early to Making Tax Digital for Income Tax, either by choosing to join now or for the next tax year.

If you sign up for this tax year (6 April 2025 to 5 April 2026), you’ll:

• have access to a dedicated Making Tax Digital Customer Support Team whilst volunteering, to help you with any questions about the service
• build your understanding of, and confidence in, using the new systems and processes early
• not receive penalties if you send a quarterly update late whilst volunteering

Read more about how to sign up early and use Making Tax Digital for Income Tax.