The 2026 rules, in plain English

1. What is actually changing

Today most self-employed people and landlords tell HMRC about their income once a year, on a Self Assessment tax return. Making Tax Digital for Income Tax keeps the yearly return and adds digital records and quarterly updates. From your start date, three things become routine:

1. Keep digital records of your business and property income and expenses as you go, in software.
2. Send a quarterly update four times a year: a running summary of your income and expenses so far, sent from MTD-compatible software.
3. Send your tax return from the same software after the tax year ends, confirming the year and adding any other income.

2. Who it affects, and when

It depends on your qualifying income: your gross self-employment income plus your gross property income, before expenses. Wages, pensions, dividends and savings don’t count. It is phased in by income:

If your income later falls below the threshold, specific rules decide whether you can leave, so check your position each year. Partnerships and some more complex cases follow later. HMRC can also grant exemptions, for example if you can’t use digital tools.

3. The quarterly updates

A quarterly update is a summary of your income and expenses for the tax year so far, grouped into HMRC’s categories. Each one is cumulative: it covers everything from 6 April to the end of that quarter. With HMRC’s standard tax-year quarters:

Updates aren’t your final word: you can correct figures as you go and settle everything after the year closes. HMRC accepts an update from 10 days before the period ends. You can choose calendar quarters instead, but your software and HMRC must agree on which you use; a mismatch is a common reason updates fail.

4. The tax return

After the year closes you send your tax return from your MTD software (HMRC used to call this the final declaration). You confirm your business and property figures, add any other income such as employment, savings or dividends, claim reliefs and arrive at your final tax position. It is due by the usual 31 January: for the 2026/27 year, that is 31 January 2028.

5. Penalty points

Late quarterly updates earn penalty points instead of instant fines: one point for each missed deadline. Reach four points and you get a £200 penalty. Below four points, each point drops off after 24 months. At four, you clear them by sending everything on time for 12 months and catching up anything outstanding.

Paying late has its own penalties: a percentage of the unpaid tax after 15 and 30 days, then a yearly rate on top until it is paid.

6. What you’ll need

1. MTD-compatible software that keeps digital records and sends updates to HMRC. HMRC doesn’t provide its own.
2. A digital link from where figures are recorded to where they are sent. A spreadsheet works only with bridging software; retyping figures between systems isn’t allowed.
3. Little-and-often habits. Quarterly updates mean the books can’t wait until January, and keeping them as you go is far less painful.

7. Where .EWA fits

.EWA is being built for this. It will keep your digital records as money moves, sort each line into the right HMRC category by rules you can read, keep a live tax figure, prepare each quarterly update and the tax return, and run Shield’s eight checks before anything is sent. Then it will keep a receipt of what HMRC received.

.EWA is in development and HMRC recognition is in progress. Filing switches on once HMRC approves .EWA’s software.