MTD for Income Tax starts on 6 April 2026 for those over £50,000 income, and HMRC has now confirmed key points on software, thresholds, opting out, and penalties.

There are now fewer than 40 days until Making Tax Digital for Income Tax becomes mandatory for the first group of sole traders and landlords.

From 6 April 2026, around 864,000 people with qualifying income over £50,000 will need to:

• Keep digital records
   
• Submit quarterly updates
• Continue filing a year end tax return
  

HMRC has recently clarified some of the more complex areas. Here is what actually matters to you.

1. Can You Use Bridging Software?

Yes.

HMRC has confirmed that bridging software is allowed.

This means:

• You can keep records in spreadsheets
  
  
• Use bridging software to submit quarterly updates
  
  
• You do not have to move to full cloud accounting software
  
  

However, HMRC says its preference is for taxpayers to use fully compatible MTD software.

AskJT view:
Bridging software can work. But it increases friction. And friction is the enemy under MTD.

If your records are already messy, moving to proper software now will save you stress by August.

2. When Do You Have to Register?

HMRC would like you to register before 6 April 2026.

But that is not a hard deadline.

The key practical deadline is:

📅 Friday 7 August 2026
This is the first quarterly submission deadline.

You must be:

• Registered
• Set up with software
• Tested
• Ready to file
  

Do not wait until late July. This is a brand new system for HMRC as well.

3. What Exactly Is Due on 7 August 2026?

Your first quarterly update.

This must include:

• Separate figures for each trade
   
• Separate property income reporting
• Categorised income and expenses
  

Important:
Quarterly reporting does not replace your tax return.

You will still file a Self Assessment return by:

📅 31 January 2027 for the 2025–26 tax year.

MTD adds work. It does not remove it.

4. What If Your Income Goes Over £50,000 Mid-Year?

You are assessed based on your previous tax return.

HMRC has confirmed:

If you cross £50,000 during a year, you do not join immediately.

You join from the following April.

5. What If Your Income Drops Below the Threshold?

This is where people get caught out.

Once you are in MTD, you stay in until:

• Your qualifying income is below the threshold
• For three consecutive years
  

Only then can you opt out.

You will still need to file a tax return.

Exception:
If all qualifying income stops completely, you can notify HMRC and exit earlier.

6. What Happens If You Retire?

Retirement is treated differently.

If your only source of qualifying income stops:

1. Log into your Personal Tax Account
    
2. Update the date income ceased
    
3. Submit your final quarterly update
    
4. File that year’s return using MTD software
   

You do not have to remain inside MTD for three years if the income has genuinely ceased.

7. Can You Align VAT and MTD Dates?

If you are VAT registered, you can request a change to your VAT quarter end dates.

This is done through your VAT online account.

Aligning both can reduce admin stress.

If your systems are weak, misaligned dates will magnify chaos.

8. What If You Disagree With HMRC?

If HMRC says you must join MTD and you disagree, you need to contact them directly.

In most cases, their decision is based on your submitted tax return.

There are limited exemptions, including digital exclusion.

But do not assume you can simply ignore the letter.

9. I Live Abroad. Does This Apply?

Non-UK residents get a one-year deferral.

If you filed SA109 pages in 2024–25, MTD will apply from:

📅 6 April 2027

This applies automatically.

10. Are There Penalties?

HMRC is taking a soft landing approach in year one.

Penalties for errors will be waived initially.

From April 2027, the full penalty regime applies.

Do not confuse “soft landing” with “optional”.

Quarterly filing will still be mandatory.

The Real Issue Is Not Tax. It Is Systems.

MTD is not a tax change.

It is a systems change.

Under Self Assessment, you could reconstruct records months later.

Under MTD:

• You must be organised
   
• You must be consistent
   
• You must think quarterly
  
  For landlords and sole traders who treat bookkeeping as an annual event, this is a fundamental shift.

Practical AskJT Advice

1. Do not leave registration until July 2026.
   
   
2. Choose your software early.
   
   
3. Test quarterly reporting before August.
   
   
4. Align VAT quarters if possible.
   
   
5. If income is volatile, model your thresholds now.
   
   

Want a Calm, Structured Plan for MTD?

If you are a landlord or sole trader reading this and thinking:

“I understand the rules, but I don’t have a system.”

That is exactly why I wrote Making Tax Digital Without the Panic.

It is not a tax manual.

It is a practical systems guide that walks you through:

• Choosing software properly

• Setting up digital records correctly

• Avoiding common threshold traps

• Building a quarterly routine that takes minutes, not days

• Deciding whether incorporation even makes sense

Most of the stress around MTD is coming from people trying to bolt quarterly reporting onto messy foundations.

This book helps you fix the foundations first.

If you want to approach 6 April 2026 calmly rather than reactively, you can find the book here:

https://amzn.eu/d/04xi7FtP

Because under MTD, organisation beats intelligence every time.