Skip to main content Why has HMRC written to me about MTD for Income Tax?
If you are self-employed, a sole trader, freelancer or landlord, you may have received a letter from HMRC about Making Tax Digital (MTD) for Income Tax. We’re here to explain what that’s all about, and what your next steps should be.
MTD for Income Tax is the new way many sole traders and landlords will report tax. Out go the old-style online and paper tax returns; instead, you’ll now keep fully digital records, file top-line information to HMRC each quarter about your income and costs, and you’ll also file an annual final declaration confirming all your year’s numbers.
MTD for Income Tax will become compulsory for most self-employed business owners and landlords over the next few years. These are the deadlines:
- from April 2026 for those with qualifying income over £50,000 in 2024/25
- from April 2027 for those with qualifying income over £30,000 in 2025/26
- from April 2028 for those with qualifying income over £20,000 in 2027/28
In the last few months of 2026, HMRC will send out two sets of letters about this new tax system. Which one you may receive will depend on when HMRC thinks you should be complying with this new set of rules.
If you were in the first group of people expected to follow MTD for Income Tax (i.e. your qualifying income was over £50,000 in 2024/25), and you have not already registered, you may have received a letter to tell you that HMRC has automatically signed you up for the new system. There’s no need to panic - you won’t have received any penalties - but you have a little bit of catching up to do. Head over to our dedicated explainer for easy-to-follow next steps: HMRC has signed me up for MTD - what do I do now?
If you are in the second group of people expected to follow MTD for Income Tax, i.e. those with a qualifying income of over £30,000 for the 2025/26 tax year, you may have received a different letter informing you that you should start using MTD from April 2027. Read on for what you should do next.
1. Register with HMRC to use MTD for Income Tax
While HMRC has started automatically signing up some people who should have started using MTD for Income Tax in April 2026, there is (as yet) no indication they’ll do the same for you. The best way to get ready for MTD for Income Tax remains to register yourself, as soon as possible. You can sign up with HMRC right now. If you want to find out more about signing up, read our guide.
If you think you may be exempt, you will have to apply to HMRC
Switching from old-style Self Assessment to MTD for Income Tax is mandatory - but there are very limited exemptions, for example if you cannot access the internet or are a member of a religious society that prohibits its use. If you have not applied for - and received - an exemption, you will be expected to comply with MTD for Income Tax. HMRC has more information on exemptions here.
What if my income drops below £30,000?
If you met the MTD for Income Tax criteria based on your 2025/26 tax return, you will still have to join MTD for Income Tax from April 2027 - even if your qualifying income dropped below £30,000 in the following year (unless all your sources of qualifying income stopped - for example, because you ceased trading). If your qualifying income remains below £30,000 for three consecutive years, you can contact HMRC to ask to return to the Self Assessment tax return system. (But remember, the MTD for Income Tax qualifying income threshold will fall to £20,000 from April 2028.)
2. Check you’ve got the right software
You must use MTD-compatible software that’s officially recognised by HMRC (like FreeAgent) to file your quarterly updates online and to send your final declaration each year. Your quarterly updates will be a summary of your business income and expenses for the preceding three months, and can be a ‘best guess’ if you don’t have final figures yet. But before you hit send on your final declaration, all your figures must be fully checked, confirmed and accurate.
You will no longer be able to submit figures through HMRC’s website or using a paper form - all your record-keeping and filing must be done with compatible software.
3. Mark the new dates in your calendar
During the transition from Self Assessment to MTD for Income Tax, many people will still be filing one last Self Assessment before the usual January deadline - even though they have already begun to send their digital quarterly updates to HMRC in the new system. So it’s really important to make sure you are aware of all the deadlines coming your way.
This is what your dates will look like if your qualifying income was over £30,000 in 2025/26, and you are therefore in the second wave of people required to follow MTD for Income Tax rules.
| Deadline | What you need to have done by this date |
|---|---|
6th April 2027 | Start keeping records using MTD for Income Tax software |
7th August 2027 | Send your first quarterly update for 2027/28 |
7th November 2027 | Send your second quarterly update |
31st January 2028 | Submit a Self Assessment tax return for 2026/27 |
7th February 2028 | Send your third quarterly update |
7th May 2028 | Send your fourth quarterly update |
7th August 2028 | Send your first quarterly update for 2028/29 |
7th November 2028 | Send your second quarterly update |
31st January 2029 | Submit your tax return straight from MTD for Income Tax software for 2027/28 |
7th February 2029 | Send your third quarterly update |
7th May 2029 | Send your fourth quarterly update |
Quarterly updates do not mean quarterly tax bills. You will still only pay once or twice a year. But you must submit your quarterly updates by the relevant deadline. All quarterly updates and final declarations will be sent straight to HMRC from your MTD for Income Tax-compatible software. There will be a new system of penalties for failing to complete these steps - read more about how you can avoid them here.
4. Good job, time for a cuppa
If you’ve ticked off everything on this list, well done - you’re ready for MTD for Income Tax!
“As you can see, there are a few steps to take to be ready for MTD for Income Tax, so don’t bury your head in the sand and hope it will all take care of itself,” says FreeAgent’s Chief Accountant Emily Coltman FCA.
“Start preparing now. Choose which software you’re going to use and start keeping your records on it, so that you’re comfortable with the new system by the time it becomes compulsory for you.”
If you’re looking for more resources to help you navigate MTD for Income Tax, check out our collection of guides and webinars. We have the answers to lots of frequently asked questions, such as…
- How do I sign up for MTD for Income Tax?
- How should I set up FreeAgent to submit my first MTD quarterly update?
- How accurate do my quarterly updates need to be?
- What are the new MTD penalties - and how can I avoid them?
If you’re still feeling a bit overwhelmed by MTD for Income Tax - which is entirely understandable! - you can always enlist the help of an accountant. Have a look through our FreeAgent-accredited accountants directory. We’ll help you get MTD done.
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.
