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MTD for Income Tax Checklist 2026: 8 Steps Before Your First Quarterly Submission

MTD for Income Tax Checklist 2026: 8 Steps Before Your First Quarterly Submission

Your complete MTD checklist for 2026

The first quarterly submission deadline under MTD for Income Tax is 5 August 2026 (for the quarter April–July 2026). If you are in Phase 1 (qualifying income over £50,000 in 2024/25), here is exactly what you need to do before that date.

Step 1: Check whether you are in scope

MTD for Income Tax Phase 1 applies if your qualifying income exceeded £50,000 in the 2024/25 tax year.

Qualifying income = gross self-employment income + gross UK property income combined.

Check your 2024/25 Self Assessment return. Look at your total income from these two sources before expenses. If the combined total exceeds £50,000, you are in scope for April 2026.

PAYE employment income does not count towards the MTD threshold.

If your 2024/25 qualifying income was between £30,000 and £50,000, you enter Phase 2 from April 2027. Between £20,000 and £30,000, you enter Phase 3 from April 2028.

Step 2: Register for MTD via Government Gateway

You must sign up for MTD for Income Tax through your Government Gateway account. Your software cannot connect to HMRC until you have done this.

To sign up:

  1. Log in to your Government Gateway account at tax.service.gov.uk
  2. Navigate to "Making Tax Digital for Income Tax"
  3. Complete the sign-up process

If an accountant or tax agent is managing your affairs, they can sign you up on your behalf through their agent services account.

Note: Once you sign up, you cannot file a traditional Self Assessment return for that tax year. You are committed to the MTD process.

Step 3: Choose your MTD-compatible software

Select software from HMRC's list of approved MTD products before you register, or immediately after. You cannot make quarterly submissions without it.

Main options:

  • Free: HMRC Basic Tools, or Mettle business account with free FreeAgent
  • Paid: QuickBooks (~£8–14/month), FreeAgent standalone (~£19/month), Xero (~£16+/month), Sage (~£15/month)

Choose something you will actually use. A simple interface you will keep up with beats a feature-rich platform you find overwhelming.

Step 4: Connect your software to your HMRC account

Once you have chosen your software, you need to authorise it to connect to HMRC on your behalf. This is done within the software — look for "Connect to HMRC" or "MTD authorisation" in the settings.

You will need your Government Gateway login to complete the authorisation. The connection lasts for 18 months and then needs to be refreshed.

Step 5: Set up your digital records from April 2026

From the start of the 2026/27 tax year (6 April 2026), your income and expense records must be kept digitally using your MTD-compatible software (or a linked spreadsheet, if using bridging software).

This means:

  • Logging income when received, not at year end
  • Recording expenses as they occur with enough detail (category, amount, date)
  • Keeping digital copies of receipts where possible (most software has a receipt photo feature)

You do not need years of historic records in digital form. Just start from 6 April 2026.

Step 6: Know your four quarterly deadlines

Each quarterly update covers a specific three-month period. The deadlines are:

| Quarter | Period | Deadline | |---------|--------|----------| | Q1 | 6 April – 5 July 2026 | 5 August 2026 | | Q2 | 6 July – 5 October 2026 | 5 November 2026 | | Q3 | 6 October 2026 – 5 January 2027 | 5 February 2027 | | Q4 | 6 January – 5 April 2027 | 5 May 2027 |

Mark these in your calendar now.

Step 7: Understand what a quarterly update contains

A quarterly update is not a full tax return. You are submitting:

  • Total income for your self-employment or property business during the quarter
  • Total expenses by category (e.g. office costs, travel, professional fees, repairs for landlords)

You are not submitting:

  • Individual receipts or invoices
  • VAT amounts (that is a separate process if you are VAT registered)
  • Capital gains or investment income (these go in the final declaration)

Your software generates the submission from your records. You review it, confirm it looks right, and submit. Most people find this takes 10–30 minutes per quarter once their records are up to date.

Step 8: Complete the final declaration (replaces Self Assessment)

After 5 April each year, you complete a final declaration (previously the Self Assessment tax return). This is where you:

  • Confirm your quarterly totals are correct
  • Add any income not covered in quarterly updates (savings interest, dividends, PAYE employment income, capital gains)
  • Claim any additional allowances (gift aid, pension contributions, marriage allowance)
  • Review your final tax calculation

The deadline for the final declaration is 31 January — same as Self Assessment was. Your tax payment deadline is also unchanged at 31 January.

HMRC grace period in 2026/27

HMRC has confirmed that for the first year of MTD (2026/27 tax year), they will take a light-touch approach to penalties. People who are clearly making an effort to comply but make honest mistakes or miss a deadline will not automatically receive penalty points.

This does not mean you should ignore the deadlines. The grace period is for genuine errors and teething problems, not deliberate non-compliance.

From 2027/28 onwards, the penalty points system is fully active. Each missed quarterly submission earns a point, and once you reach the threshold (4 points in a 12-month period for quarterly filers), a £200 penalty is charged.

The MTD Ready kit

Want a personalised version of this checklist based on your specific situation — current software, income type, and record keeping setup? The MTD Ready kit generates a tailored 10-step action plan as a downloadable PDF. One-time £29.

Frequently Asked Questions

What is the first MTD deadline I need to worry about?

The first quarterly submission deadline is 5 August 2026, covering the period 6 April to 5 July 2026. If you are in Phase 1 (qualifying income over £50,000), this is your first live deadline.

Do I need to register for MTD before I choose software?

You can choose your software first — which is actually sensible, since you will need it ready to connect when you register. The important thing is that both are done before your first quarterly deadline.

What if my income drops below the threshold next year?

You can apply to HMRC to stop using MTD if your qualifying income falls below the relevant threshold for two consecutive tax years. There is a formal process to exit MTD — you cannot just stop submitting.

Can my accountant handle my MTD submissions?

Yes. If you authorise your accountant as your MTD agent, they can submit quarterly updates and the final declaration on your behalf using their agent software. You will still need to ensure your underlying records are accurate and accessible to them.

Is there a penalty for filing the final declaration late?

Yes. The final declaration has the same late filing penalties as Self Assessment: £100 immediately after the deadline, further penalties after 3 and 6 months, and additional daily penalties after 12 months. The deadline is 31 January following the end of the tax year.

What records do I need to keep digitally?

At minimum: the date, amount, and category of each income receipt and each business expense. You do not need to store digital copies of every receipt, but it is good practice and makes expense queries much easier to resolve.

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