Making Tax Digital deadline nears for first income tax updates

The first major Making Tax Digital deadline for Income Tax arrives on 7 August 2026, when sole traders and landlords in scope must submit their initial quarterly update to HM Revenue and Customs. Neil Martin, writing on Finextra, said the regime covers 864,000 taxpayers, making the date an early test of HMRC’s wider shift to digital reporting.

The update relates to income and expenses for the opening quarter of the 2026-27 tax year. For most affected taxpayers, that period runs from 6 April to 5 July 2026. Some users may instead follow calendar quarters, with the first period running from 1 April to 30 June.

Making Tax Digital for Income Tax became compulsory from April 2026 for sole traders and landlords with qualifying income above £50,000. The programme requires digital record-keeping and submissions through software recognised by HMRC.

What is the Making Tax Digital deadline?

The immediate deadline is 7 August 2026 for the first quarterly update under Making Tax Digital for Income Tax. The filing is a summary of income and expenses sent during the tax year, rather than the annual Self Assessment tax return.

HMRC has said taxpayers still file a full tax return once a year, and that the final return and payment deadline remains 31 January after the tax year closes. No tax payment is due as a direct result of the quarterly summary.

Craig Ogilvie, HMRC’s director of Making Tax Digital, described the deadline as a “landmark moment” for the tax system. He said hundreds of thousands of sole traders and landlords are now maintaining digital records and are due to send their first quarterly update in the coming weeks.

Ogilvie said the process should be straightforward for those already using compatible software and should take minutes. He added that taxpayers who have not yet signed up still have time to do so.

How the quarterly update works

The quarterly submission is designed to give HMRC a running summary of a taxpayer’s business or property income and expenses during the year. HMRC says it is not a tax return, and Martin wrote that it is sent directly to the department through recognised software.

HMRC has presented the system as a way to give taxpayers a clearer estimate of their eventual tax position after each filing. Critics have argued that the rules add to administrative work for businesses and require third-party software, which may involve costs depending on the product used.

Exemptions are available in some circumstances, including for people HMRC regards as digitally excluded. The content supplied by HMRC and cited by Martin does not set out the full exemption process.

What happens if a taxpayer misses a quarterly update?

No penalty points will be issued for late quarterly updates during the first year of Making Tax Digital for Income Tax, according to Martin. Existing penalties still apply for late Self Assessment returns and late tax payments.

After the second year, Martin wrote, a points-based system will apply to missed quarterly deadlines. A taxpayer receives one point for each missed quarterly filing date, and once four points are reached a fixed £200 penalty is charged. Points can expire after a period of compliance.

The 7 August deadline therefore affects reporting rather than immediate tax payment, but it also establishes the operating rhythm for taxpayers now inside the digital system. For advisers, software providers and affected landlords and sole traders, the first filing will show how prepared the new process is at scale.

This story draws on original reporting from Finextra Research.