Making Tax Digital for Income Tax, in plain terms
By Sage Vinson · Updated 22 September 2026
Making Tax Digital for Income Tax replaces one annual tax return with digital records, four quarterly updates and a final declaration. You are in it once your qualifying income passes a threshold: £50,000 from 6 April 2026, £30,000 from 6 April 2027, and £20,000 from 6 April 2028. Qualifying income is turnover before expenses, not profit, which is why it catches far smaller businesses than people assume. It does not change what you owe or when you pay it. It changes how often you report.
The short version
- Self-employment and property income are added together for the test, so one flat let out can move a trade up a rung on its own.
- The rung you land on is decided by a return already filed, which makes this knowable now rather than a guess about the year you are having.
- A quarterly update carries no payment. It is a report, and the dates you actually pay on do not move.
- Each update restates the year so far rather than the last three months, which is why a first-quarter error is fixed by the following one instead of amended.
- SoloDesks is not MTD software and files nothing to HMRC. The question for any supplier is whether HMRC lists them as compatible for Income Tax, not whether the website says "MTD ready".
On this page
Qualifying income is turnover, and that is the whole misunderstanding
Qualifying income is your gross income from self-employment and property, added together, before a single expense comes off. Not profit, not what you took out of the business, not what landed in your personal account.
For a trade that buys materials that distinction is enormous. Turn over £45,000 with £20,000 of it going straight to merchants and your profit might be £25,000, but the test looks at the £45,000 and you are in.
If you have rental income as well as the trade, both count and they are added together. A plasterer with one flat let out reaches a threshold sooner than the same plasterer without it.
The last rung sets quarterly filing at £20,000 of turnover, while the national business register only starts counting a business at the VAT threshold of £90,000. Our study of that gap found a band of businesses required to file quarterly that official statistics cannot see at all. Read the invisible filer study
The test looks backwards, so the year that catches you has already happened
HMRC decides using a return you have already filed. The £50,000 rung that started on 6 April 2026 was worked out from the 2024 to 2025 tax year return. The £30,000 rung starting 6 April 2027 is decided by the 2025 to 2026 tax year, and the £20,000 rung starting 6 April 2028 by the 2026 to 2027 tax year.
Which means you can work out today whether you are in next April, and you can also be pulled in by a busy year you have already had and stopped thinking about. HMRC writes to people it believes are in scope, but the obligation does not depend on the letter arriving.
It also means a quiet year does not get you out of it immediately. The threshold test is applied to a filed return, so falling below is not a same-day exit, and the rules for leaving are their own process rather than an automatic switch.
| Qualifying income over | You are in from | Worked out from |
|---|---|---|
| £50,000 | 6 April 2026 | 2024 to 2025 tax year |
| £30,000 | 6 April 2027 | 2025 to 2026 tax year |
| £20,000 | 6 April 2028 | 2026 to 2027 tax year |
What a quarterly update actually is
Four times a year you send HMRC the totals of your income and expenses, by category, from software. That is it. It is not a tax calculation, there is no bill attached, and nothing gets paid on the back of it.
The updates are cumulative rather than three-month snapshots: each one covers the tax year to date, so a mistake in the first quarter is corrected by the next update rather than by an amendment.
After the year ends you file a final declaration, which is where allowances, reliefs and anything outside the business get added and the actual tax is worked out.
Tax payment dates do not move. Your bill is still due 31 January, with payments on account 31 January and 31 July as before. Anyone telling you MTD means paying tax four times a year has it wrong.
| Period covered | Filed by |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
What it means for your records
Records have to be digital and they have to reach HMRC from compatible software. A shoebox of receipts and a year-end session with the accountant stops being viable, and a spreadsheet only works if bridging software carries it over.
The practical shift for most one-person businesses is not the filing, it is doing the bookkeeping four times a year instead of once. That is genuinely more work in a year when nothing goes wrong, and genuinely less painful in the January after a year when it did.
Be clear about what this site does and does not do, because there is a lot of loose marketing about it: SoloDesks is not MTD software and does not file anything to HMRC. It keeps your quotes, invoices and payment records in one place so that whatever you do file from has a clean set of numbers to start from, rather than a folder of photographs of paperwork.
If you already work with an accountant, the conversation to have this year is who is doing the quarterly updates and what that costs, because the answer changes what software you need and sometimes whether you need any.
What to do before your rung arrives
Work out which return decides your position and look at the turnover figure on it, before expenses. If that number is over the threshold for your rung, you are in from the start date and there is nothing to decide.
Then get records digital early, in the tax year before the one that counts. Starting the habit while an annual return is still your only obligation is much easier than starting it in the first quarter that carries a deadline.
Check what your existing tools actually do. Plenty of software used by trades handles invoicing beautifully and does not file anything, so the question to ask a supplier is simply whether they are on HMRC's list of compatible software for Income Tax, not whether they are "MTD ready".
And if you are close to a threshold, know which side you are on before April rather than after it. The ladder is public and dated: 6 April 2026, 6 April 2027 and 6 April 2028.
Common questions
- Am I in Making Tax Digital for Income Tax?
- You are once your qualifying income, meaning turnover from self-employment and property before expenses, passes the rung for the date: £50,000 from 6 April 2026, £30,000 from 6 April 2027, £20,000 from 6 April 2028. HMRC checks a return you have already filed to decide.
- Does it mean paying tax four times a year?
- No. Quarterly updates are reports with no payment attached. Tax is still due 31 January, with payments on account on 31 January and 31 July where they apply.
- Do I still file a tax return?
- You file a final declaration after the year end instead of the old annual return. It does the same job: allowances, reliefs, anything outside the business, and the calculation of what you owe.
- Is qualifying income the same as profit?
- No, and this is the most expensive misunderstanding in the whole subject. It is gross turnover before expenses, with self-employment and property income added together, so a materials-heavy trade can be well inside the rules on a modest profit.
- Do I need new software?
- You need software that is compatible with Making Tax Digital for Income Tax, or an accountant filing on your behalf from theirs. Bridging software can carry a spreadsheet over. Invoicing tools, including this one, are not automatically filing tools, so ask the direct question rather than reading the marketing.
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More on tax and vat
- CIS deductions, and how you get the money backWhat the 20% and 30% deductions come off, what a contractor must take off first, the monthly statement you are owed, and how you get the money back.
- The VAT reverse charge, and what your invoice has to sayWhen the domestic reverse charge applies, the wording HMRC expects on the invoice, the end user statement that switches it off, and what it does to cashflow.
- Do you need to register for VAT?The £90,000 rolling threshold, the two tests that catch trades out, what registering does to a price you quote a homeowner, and the flat rate trap.
- How much tax to set aside, and the January surpriseA percentage that survives a full year, why the first January bill is half as big again as you expect, and the payments on account rule CIS subcontractors miss.
All of it, in the order you need it, on the tax and vat hub.
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