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If you are a sole trader or landlord, since 6 April you must use MTD if your total annual income from self-employment and property letting is over £50,000. This means signing up to MTD on the HMRC website, and keeping digital records of your income and expenses using commercial software that can file your quarterly statements and tax returns.
Your software must not only keep records of your business or property income but also add any other income needed to complete your tax return.
However, by two weeks into March, despite extensive advertising and individual letters from HMRC, only 10% of the estimated 864,000 people affected had signed up. The first quarterly update is due on 7 August, so if you need to sign up it’s time to get moving. Although no penalty points will be imposed for late quarterly updates during 2026/27, you must have submitted them before you can file your 2026/27 tax return, due on 31 January 2028.
HMRC has not provide any free MTD-compatible software. If your business is VAT-registered, you will already be using software to keep digital records and submit your VAT returns, so check whether it is also compatible with MTD for income tax. If you are not VAT-registered but use software to keep your business records, you can check with your provider whether it can meet your MTD requirements or be extended to do so. Your software must not only keep records of your business or property income but also add any other income needed to complete your tax return. Some banks are giving free software to their business customers – you could try asking yours.
HMRC has a tool for finding software suitable for your needs. It does not recommend any specific product, but all the products listed within the tool have been through its recognition process. Finally, if you have an agent, make sure they can support you with your chosen software.
