The test is gross turnover, not profit, which is why a one-van operation was already mandated from April 2026. Here is which phase applies to you, and which tax return decided it.
Making Tax Digital for Income Tax is phased on qualifying income, and qualifying income is gross. HMRC's wording is exact: your total income from self-employment and property, before expenses — turnover — based on the tax return you submitted in the previous tax year.
| Phase | Qualifying income over | Mandated from | Decided by |
|---|---|---|---|
| 1 | £50,000 | 6 April 2026 | Your 2024-25 return |
| 2 | £30,000 | 6 April 2027 | Your 2025-26 return |
| 3 | £20,000 | 6 April 2028 | Your 2026-27 return |
Because it is turnover rather than profit, a sole-trader tradesperson turning over more than £50,000 — on typical margins, a one-van operation — was already mandated from 6 April 2026 on the strength of a return filed long before. By April 2028 at £20,000, essentially every full-time self-employed tradesperson is in.
Counts: self-employment turnover and property income, added together across every source.
Does not count: employment income taxed through PAYE; partnership profit shares; dividends, including from your own company; the State Pension; private pensions; UK REIT and PAIF income; transition profits from basis period reform; and qualifying care relief income.
Which produces a result worth knowing if you are incorporated: a director-shareholder taking a salary and dividends from a limited company has no qualifying income from that company, and is not brought into Making Tax Digital by it. And partnerships are not in scope at all yet — HMRC has said the timeline will be set out later and has not set one.
Each update is cumulative from the start of the tax year. It covers the year to date, not just the three months, which is the part that surprises people the first time.
| Period | Deadline |
|---|---|
| 6 April – 5 July | 7 August |
| 6 April – 5 October | 7 November |
| 6 April – 5 January | 7 February |
| 6 April – 5 April | 7 May |
The updates are summaries of income and expenses by category rather than tax returns, and no tax is paid quarterly. The Self Assessment return still exists and is still due on 31 January — it is simply filed through MTD-compatible software rather than HMRC's online service.
There are no penalties for missed quarterly update deadlines in 2026/27. Late submission then becomes points-based — one point per missed deadline, with a penalty at four points. Late payment percentages have already increased: 3 percentage points at 15 days, another 3 at 30 days, and 10 percentage points a year from day 31. In your first year in the regime you get 30 days from the due date before penalties start rather than 15, and penalties pause from the date you contact HMRC if a payment plan is agreed.
Some taxpayers were deferred to April 2027 regardless of turnover: recipients of trust and estate income, users of averaging adjustments, recipients of qualifying care income, and foreign entertainers and sportspeople.
It depends on your gross turnover, not your profit. Over £50,000 of qualifying income on your 2024-25 return means you were mandated from 6 April 2026. Over £30,000 on your 2025-26 return brings you in from 6 April 2027, and over £20,000 on your 2026-27 return from 6 April 2028. Because the test is turnover, a one-van sole trader on typical margins was already in from April 2026 — and at £20,000 essentially every full-time self-employed tradesperson is in. The figure that decides it is taken from the return you already filed, so by the time the obligation starts the number behind it is history.
Your total income from self-employment and property, before expenses — turnover, in other words, aggregated across all sources. What does not count: employment income taxed through PAYE, partnership profit shares, dividends including from your own company, the State Pension, private pensions, UK REIT or PAIF income, transition profits from basis period reform, and qualifying care relief income. So a director-shareholder taking salary and dividends from a limited company has no qualifying income from that company at all. Jointly held property counts at your share, and property income is added to self-employment turnover across all sources.
Not yet, and no date has been set. HMRC's position is that partnerships will need to use Making Tax Digital for Income Tax in the future and that the timeline will be set out later. So a trade business run through a genuine partnership sits outside it for now — and a partner's profit share does not count towards their own qualifying income either. A further group was deferred to April 2027 at Budget 2025: recipients of trust and estate income, users of averaging adjustments, recipients of qualifying care income, and foreign entertainers and sportspeople.
In 2026/27, nothing — there are no penalties for missed quarterly update deadlines in the first year. After that it is points-based: one point per missed deadline, with a penalty at four points. Late payment is the part that already bit harder, at 3 percentage points at 15 days, another 3 at 30 days, and 10 percentage points a year from day 31. In your first year in the regime you get 30 days from the due date to pay or contact HMRC before penalties start, rather than 15, and penalties are paused from the date you contact HMRC if a payment plan is agreed.
Three months of returns and statements, a straight account of what is wrong and what it is costing, and a number on the gross payment status question.
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