What Making Tax Digital for Income Tax is
Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.
From 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property.
You will need to use compatible software like Coconut that works with Making Tax Digital for Income Tax to:
create, store and correct digital records of your self-employment and property income and expenses
send your quarterly updates to HMRC
submit your tax return and pay tax due by 31 January the following year
Who should sign up and when
Making Tax Digital for Income Tax is currently voluntary. You may be able to sign up to help us test and develop the service. If you want to sign up at this stage, you can choose whether you want to sign up:
for testing
early, so you are prepared to use the service
HMRC will check that you’re eligible to sign up based on the details that you provide.
From 6 April 2026, you may need to use Making Tax Digital for Income Tax. Whether you need to sign up depends on your total annual income from self-employment or property.
HMRC has a tool to check if you need to use Making Tax Digital for Income Tax and when you need to start.
Who can sign up voluntarily
HMRC will ask you some questions when you sign up. This will confirm if you’re able to sign up voluntarily.
You can sign up voluntarily if (all of the following):
your personal details are up to date with HMRC
you’re a UK resident
you have a National Insurance number
you have submitted at least one Self Assessment tax return
you’re up to date with your tax records — for example, you have no outstanding tax liabilities
you use an accounting period that runs from either:
o 6 April to 5 April
o 1 April to 31 March — you must make sure your software can support this accounting period
Who cannot sign up voluntarily
You cannot sign up voluntarily if you:
have a payment plan with HMRC
are a partner in a partnership
claim Married Couple’s Allowance
claim Blind Person’s Allowance
are currently, or are going to be, bankrupt or insolvent
are an MP, minister of religion or Lloyds underwriter
have income from being a foster carer or being in a shared lives scheme
have income from a trust
are subject to a compliance enquiry
use ‘averaging’ or other arrangements because your profits vary between years — for example, because you’re a farmer, writer or artist
o are signing up on behalf of someone else (unless you’re an agent) — this includes (but is not limited to) if you’re:
o an insolvency practitioner
o a nominee
o a solicitor
Before you sign up
You’ll need to get software like Coconut that works with Making Tax Digital for Income Tax.
You’ll need:
your National Insurance number
your business start date or the date you started receiving property income (if this is within the last 2 tax years)
your accounting method such as cash basis accounting or traditional accounting
the tax year you would like to start using Making Tax Digital for Income Tax
If you’re a sole trader, you’ll also need:
your business name — this is the name you use on your invoices
your business address
the nature of your business (your trade)
If you have multiple income sources, you’ll need to sign up each one for Making Tax Digital for Income Tax.
Your accounting period
You can use an accounting period that runs from 1 April to 31 March. To use this accounting period you must:
select calendar update periods in the software before the first update is made
make an adjustment at the end of your first tax year — so that your income and expenses from 1 April to 5 April are included in your tax return
How penalties apply to you
HMRC’s new penalties will apply to you if you miss deadlines for:
submitting your tax return
paying your bill
You will not receive a penalty during the testing phase for missing a deadline for sending a quarterly update or during 2026/2027
HMRC will write to you to confirm when you’ve become liable for these penalties.
How to sign up
You’ll need the user ID and password you got when you signed up for Self Assessment.
You may be asked to provide further proof of your identity to use this service. You can do this by:
using an app on your mobile phone to match a photo of your face to your passport or driving licence
answering questions about information we already hold about your identity — for example, passport, credit reference, driving licence, Self Assessment, latest P60, or a recent payslip
Sign up now
Next steps
You still need to submit a Self Assessment tax return for the tax year before you started using Making Tax Digital for Income Tax. GoSimpleTax is an easy way for you to submit your return.