Making Tax Digital (MTD)

Making Tax Digital (MTD) is the government’s initiative to implement a fully digital tax system in the UK, where taxpayers keep digital records and use MTD-compatible software or ‘bridges’ to make tax submissions electronically.

The tax calendar will change with a new requirement to submit quarterly income/expense updates directly to HMRC, with a final Annual Declaration sent electronically, replacing the current annual Self Assessment Tax Return.

What this means for self employed individuals

Who is effected by MTD for Income Tax (ITSA)?

MTD for Income Tax will come into effect from 6 April 2026 and all self-employed individuals and landlords with total business or property income (turnover, not profit) above £50,000 will need to comply with the new rules. Those with income above £30,000 will need to follow the rules from April 2027.

What are the rules for MTD?

As well as quarterly reporting (we’ll cover this in a moment), you’ll also need to keep digital business records, and MTD-compliant software, such as MalgraBooks’ accounting system. You’ll need to finalise reports and send these to HMRC in a short period at the end of each quarter.

What are the Quarterly updates?

HMRC will require you to submit quarterly reports about your self employment, with details of your total income, expenses and profit/loss for the relevant period. These run in quarters throughout the year, and are shown on the table below. You must submit your details by the 7th of the following month after each quarter end.

Is this the end of the annual tax return?

No. In addition to quarterly reporting, you’ll need to submit a ‘final declaration’ at the end of the year, this replaces the tax return. It allows you to finalise any details from the quarterly reporting, and then provide the final declaration to confirm the details submitted.

Reporting periods and deadlines

Each quarter will be set by HMRC, and our system is ready to report on the new calendar periods. This table shows the reporting deadlines for each period.

	Period covered	Filing deadline
Quarterly update 1	1 April to 30 June	7 August
Quarterly update 2	1 April to 30 September	7 November
Quarterly update 3	1 April to 31 December	7 February
Quarterly update 4	1 April to 31 March	7 May

For example, the first period will run from 1 April 2026 until 30 June 2026, and the quarterly submission must be filed with HMRC by 7 August 2026.

We're ready for the new rules

MalgraBooks has been supporting self employed individuals since 2013, and with the new reporting structures coming into place, we’re ready to help support our members with these new changes.

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Frequently asked questions.

We’ve provided some frequently asked questions, but if you cannot find yours, get in touch with our team.

General Questions

General scheme questions and how MTD may affect you

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) begins from April 2026. The two income thresholds are:

Those with qualifying income of more than £50,000 will be mandated into MTD for ITSA from April 2026.

Those with qualifying income of between £30,000 and up to £50,000 will be mandated from April 2027.

Qualifying income is any monies received before expenses are taken away, otherwise known as Turnover. This is usually box 15 (SA103F) or box 9 (SA103S).

No, this is mandatory if you meet the income thresholds

HMRC’s new Making Tax Digital service brings in a new system of issuing ‘penalty points’ when a submission is late. Just like speeding fines, the points based system relates to the individual (or business if a limited company) and after so many points, financial penalties apply.

When submitted on time, no penalty points are applied – however if late, you’ll receive one point. After four points are reached, a penalty of £200 is charged.

How does it work?

Details of the MalgraBooks MTD service

All packages are eligible for MTD, however is available as an ‘add on’ for our Essentials package.

You can view the deadlines using the table above. We recommend that you update your accounts monthly, and then confirm the details are ready for reporting using our online tool. This will verify the figures and submit direct to HMRC electronically.

If this is active on your account, our team will send quarterly updates and your annual declaration directly to HMRC