Five Tax Deadlines a Year? What Self-Employed People Need to Know About MTD.
Making Tax Digital is nearly upon us. If you’re self-employed and/or you earn money from property, and you turned over £50,000 or more in financial year 2024 to 2025, you will need to start giving HMRC quarterly updates from 6th April 2026. These updates will be in addition to submitting your usual annual end of year tax return.
The quarterly updates must come via a third-party accounting software package, and if you run your books from a spreadsheet, you’ll need bridging software too. If that chills your bones, never fear. My MTD quick blog is here to help you figure out what you need to do so you don’t get caught out, and don’t get penalised when the new system starts.
Simple books and tax return If your business is small and you run simple ‘money in, money out’ bookkeeping that you do yourself, you’re already in a really good position to digitise and become compliant. Your bank may already offer MTD software that runs alongside your banking app so check with them first. If you bank with a high street bank or your bank doesn’t offer MTD compliant software, there are several options that are free to use for businesses that have low use, or simple bookkeeping needs. You should not have to pay for this service, so if someone is pushing you to sign up to a monthly subscription, press pause and do some research first. Check the MTD website for HMRC suggested software packages (link at the end).
Over the VAT threshold. If your business is over the VAT threshold of £90K for 2024-2025 then you will need accountancy software that can handle the MTD compliance for your VAT return. Chances are you already have a bookkeeper or accountant, and they should already have advised you about the most cost-effective package for your business. It is always worth doing your own research too, you know your business best after all. If you handle the VAT return yourself, the Federation of Small Business is offering an MTD compliant VAT software package called Rhino, which is currently free at the lowest levels. If you’re already an FSB member (and every sole trader and small business owner should be), check Rhino out. You can find it by logging in to the FSB site and clicking the MTD button on the main page.
Bridging software. This is simply how you turn the spreadsheets on your computer into a format that HMRC can read and analyse. It means you can keep doing what you’re doing with your Excel sales and purchase ledgers, and a clever little app can turn those ledgers into a readable format. You may or may not also need MTD software, depending on which bridging software package you choose.
Digitised receipts. Part of being self-employed is keeping records of our self-employment income and expenditure. HMRC now expects us to keep digital records of these things, which is easy if you get email receipts, but paper receipts are easy to lose and a faff to store. The simplest way to digitise for example, a petrol receipt, is to take a photo of it as soon as you have the receipt in your hand. There are also plenty of free and paid apps that scan receipts. Once you’ve got it scanned, store it somewhere safe and where you can find it easily. Mail it to yourself, put it in the cloud or store it on a memory stick, but make sure it’s labelled and you can find it again. MTD doesn’t actually require you to scan every receipt as long as you record each transaction date and amount, but capturing photos or scans can make your record‑keeping much easier to manage and back up.
So far so simple, right? Right. MTD is not complicated, but it is going to be a bit of a faff while everything switches over, and if you usually submit your tax return on the last possible day you can, you’ll need to submit two years’ worth of books over the next year: your 2025-2026 tax return and the quarterly updates for 2026-2027. I’ve included the HMRC key dates table here so that you can have a look at what happens when.
MTD for income tax: key dates*
6th April 2026 - When you must start keeping records using MTD for Income Tax software from this date.
7th August 2026 - Deadline to send your first quarterly update.
7th November 2026 - Deadline to send your second quarterly update.
31st January 2027 - Deadline to submit your Self Assessment tax return in the usual way for 2025 to 2026.
7th February 2027 - Deadline to send your third quarterly update.
7th May 2027 - Deadline to send your fourth quarterly update.
7th August 2027 - Deadline to send your first quarterly update for 2027-2028.
7th November 2027 - Deadline to send your second quarterly update for 2027-2028.
31st January 2028 - Deadline to submit your tax return straight from MTD for Income Tax software for 2026 to 2027
7th February 2028 - Deadline to submit your third quarterly update for 2027-2028.
7th May 2028 - Deadline to submit your fourth quarterly update for 2027-2028.
*Source: HMRC, ‘MTD for Income Tax – dates you need to know’, Making Tax Digital campaign site. Data reproduced in full.https://makingtaxdigital.campaign.gov.uk/mtd-for-income-tax-dates
I would encourage you to submit your 2025-2026 books as early as you can so you can concentrate on those quarterly updates as soon as possible to help keep things simple.
But what happens if we miss an update deadline, now there’s not just one to remember but five? Penalties of course, HMRC does love to get its pound of flesh out of us little guys. The good news is that in the first year of MTD, which is 2026 to 2027, quarterly update penalties will be waived. So, a late quarterly update will not be penalised if you get in a muddle or forget. There is also a clear (for HMRC) penalty points system, and if you already file a VAT return then you’ll be up to speed on this. For the rest of us, here is the simple version:
For each late quarterly update you will incur 1 penalty point.
The threshold for a fine is 4 penalty points – 4 missed quarterly updates.
The fine for four penalty points is £200.
You will be charged a further £200 for each subsequent missed deadline.
The good news is that if you have incurred up to 3 penalty points, these will each come off after 24 months of on-time updates (each point will be removed after 24 months of correct filing). If you have 4 or more points, these will start to come off once you have submitted all quarterly updates and your tax return on time for 12 months, and you have sent any outstanding quarterly updates and submitted any outstanding tax returns for the previous 24 months.
It’s important to remember that you don’t need to get everything perfect straightaway. If you miss information out of one of your updates you just add it to the next. Think of the updates as more of a working running total than a definitive mini tax return. It’s also important to remember that HMRC are here to help. If you’ve checked out all of the links and you’re still not sure, then you can call the HMRC helpline on 0300 200 3300. Be sure to have your NI number handy, write down the name of the person you’re talking to and make notes of your conversation.
Making Tax Digital is a big change, but it doesn’t have to be overwhelming. If you take a little time now to choose your software, get used to digital records and understand the key dates, the new system will soon feel like just another part of running your business. And if you’re ever unsure, talk to your accountant or use the HMRC links above – there is plenty of support available to help you get it right.
Useful Links:
HMRC Making Tax Digital guide: https://makingtaxdigital.campaign.gov.uk/
Find HMRC approved MTD software: https://www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax
Digitising your records: https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/create-digital-records
Key MTD dates: https://makingtaxdigital.campaign.gov.uk/mtd-for-income-tax-dates
Penalties for late updates: https://www.gov.uk/guidance/penalties-for-making-tax-digital-for-income-tax
HMRC general enquiries: https://www.gov.uk/find-hmrc-contacts/income-tax-enquiries
Federation of Small Business: https://www.fsb.org.uk/