Sole traders with qualifying income above £50,000 have until 7 August 2026 to send their first Making Tax Digital for Income Tax quarterly update. HMRC says more than 864,000 sole traders and landlords are within scope, making this the first major deadline under the mandatory system introduced in April.
For affected small-business owners, the immediate task is simple: check that digital records are up to date, confirm compatible software is connected to HMRC and submit the three-month summary before the deadline.
Who needs to submit by 7 August?
Making Tax Digital for Income Tax became mandatory from 6 April 2026 for sole traders and landlords whose total qualifying income from self-employment and property is more than £50,000 a year.
For most customers, the first quarterly period ran from 6 April to 5 July. Those using calendar periods covered 1 April to 30 June instead. Both groups have the same submission deadline of 7 August 2026.
The £50,000 test relates to qualifying gross income, before expenses, across relevant self-employment and property activities. Anyone unsure whether they are in scope should check their position through HMRC guidance or with their tax agent rather than relying only on profit figures.
What the quarterly update includes
The update is a summary of income and expenses recorded during the quarter. It must be sent through HMRC-recognised compatible software. HMRC describes it as a short submission rather than a tax return, and says it can take only minutes when records have been maintained throughout the period.
That distinction matters. Quarterly updates do not replace the annual tax return, and the usual Self Assessment deadline remains 31 January. A sole trader who submits the August update will still need to finalise the year’s tax information and pay tax due by 31 January 2027.
After an update is submitted, compatible software may show an estimated tax bill. This can be useful for cash-flow planning, but it is only an estimate and may change when reliefs, allowances and year-end adjustments are included.
What small businesses should check now
Businesses should avoid leaving software or record problems until deadline day. A practical pre-submission check should cover:
- whether the owner has signed up for Making Tax Digital for Income Tax;
- whether the accounting or bookkeeping software is on HMRC’s compatible-software list and properly authorised;
- whether income and expenses for the whole quarter have been entered;
- whether records held in spreadsheets or separate systems are digitally linked where required;
- whether an accountant or tax agent is submitting the update, and who is responsible for the final check; and
- whether any exemption may apply, including for people who are digitally excluded.
HMRC says customers who have not yet signed up can still do so, while agents can complete registration for their clients. Some compatible products also include HMRC Assist, which provides feedback intended to help users spot possible errors before submitting. Responsibility for accurate records remains with the taxpayer.
What happens if the first update is late?
HMRC says no penalty points will be issued for late quarterly updates during the first year of Making Tax Digital for Income Tax. This easement does not remove the legal requirement to submit, and it does not cover late Self Assessment returns or late tax payments.
From the second year, the points-based penalty regime is due to apply to missed quarterly deadlines. A taxpayer generally receives a point for each missed deadline; once four points are reached, a fixed £200 penalty can be charged. The sensible approach is therefore to establish a repeatable quarterly routine now, even with the first-year easement in place.
The scheme will reach more sole traders
The current income threshold is only the first phase. Making Tax Digital for Income Tax is scheduled to extend to people with qualifying income above £30,000 from April 2027, then above £20,000 from April 2028.
Smaller businesses below today’s threshold can use the lead time to review bookkeeping processes, ask software providers about compatibility and decide how frequently records should be reconciled. Moving from an annual paperwork rush to regular record-keeping may require some adjustment, particularly for owners who currently rely on spreadsheets, paper receipts or an accountant working mainly at year end.
For those already in scope, the priority is more immediate: confirm responsibility, complete the records and submit before 7 August. The quarterly update may be brief, but getting the underlying digital bookkeeping right is what makes it manageable.
