Making Tax Digital is no longer a deadline on the horizon; it’s one already missed by 294,000 landlords and sole traders. Here are five things you need to know about quarterly reporting, software, deadlines, and exemptions.
1. It's already live Making Tax Digital for Income Tax launched on 6th April 2026 for landlords and sole traders with qualifying income over £50,000, based on your 2024-25 tax return, and the first quarterly update deadline was 7th August.
Almost 300,000 sole traders and landlords missed it, so if you didn’t sign up in time, you’re not alone. HMRC is now signing eligible landlords up itself rather than waiting for them to come forward.
The next date to have in your diary is 7th November, when your second quarterly update is due, covering income from 6th April to 5th October. Check your eligibility now if you haven’t already, because the threshold drops to £30,000 in April 2027 and £20,000 in 2028.
2. Software isn’t optional, so choose it carefully HMRC doesn’t provide its own package, so the responsibility for finding compatible software sits with you. If you already run a spreadsheet, as most landlords do, bridging software can plug straight into it without forcing you to overhaul how you keep records.
If you use an accountant, loop them in early, as they’ll need explicit permission within the software to act on your behalf. Test a couple of options before committing; most providers offer free trials, and the wrong choice is an expensive one to unwind.
3. Quarterly reporting is not just a change of form As well as your one annual tax return, you’ll now also send HMRC a summary of income and expenses every three months. These updates are cumulative; each one covers the whole tax year to date, meaning an error in Q1 can simply be corrected in Q2 rather than resubmitted.
It’s a category-level summary, not an itemised account, and once connected to your bank feed it should largely populate itself. The discipline required is smaller than it sounds, but it’s a change from treating tax as a once-a-year event.
4. No penalties but it has an expiry date HMRC has confirmed there will be no penalties for late quarterly updates in the 2026-27 tax year. Use that grace period to bed in your process, not to ignore it – you can’t file your annual return until every quarterly update is in. From April 2027, a points-based system kicks in; four missed quarterly updates within 24 months triggers a £200 fine, with £200 for every point after that.
Late annual returns are penalised more harshly still, with the threshold set at just two points, and late payment penalties apply from day one on a sliding scale.
5. Exemptions exist, but they’re narrow HMRC can exempt landlords who are digitally excluded because of age, disability or lack of internet access and using compatible software genuinely isn’t practical. There’s also an option to opt out if your qualifying income falls below the threshold for three consecutive tax years.
For most landlords, however, it isn’t going away, so the smarter move is preparing for it rather than hoping to sidestep it.
