Making Tax Digital for Income Tax: who it applies to and how it works
Making Tax Digital for Income Tax applies to individuals whose qualifying income from self-employment and/or UK property is above HMRC's current threshold. If that is you, you keep digital records of that income and its expenses, send quarterly updates to HMRC using compatible software, and submit your tax return after the tax year ends. It is a different regime from Making Tax Digital for VAT, and it does not apply to limited companies.
This guide explains HMRC's rules for one specific regime. It is not a description of which business types or tax workflows Quarter Day will support at launch — that will be confirmed before subscriptions open.
Who it applies to
The regime is aimed at people who are self-employed (sole traders, including trades, freelance and consulting work, delivery driving, online selling and similar) and people who let property (landlords), where their combined qualifying income is above the threshold HMRC has set for the relevant tax year. HMRC is phasing it in over several years, with the income threshold reducing at each stage. See what counts as qualifying income and check the current thresholds and dates on GOV.UK.
It does not apply to limited companies, which pay Corporation Tax. VAT-registered businesses may separately be within Making Tax Digital for VAT, which uses VAT Returns rather than quarterly updates.
What actually changes
The biggest shift isn't the tax you owe — it's the process. Instead of gathering a year's worth of receipts once a year, you keep digital records as you go and send a summary four times a year. See what counts as a digital record for the specifics.
| Stage | What happens |
|---|---|
| Ongoing | Create and maintain the required digital records |
| Each quarter | Send the required quarterly update — see the deadlines guide |
| After the tax year | Submit your tax return — see the year-end return guide |
If you're self-employed
"Self-employed" covers a wide range of work — a plumber invoicing customers directly, a freelance designer billing clients, a courier logging delivery income, someone selling on marketplaces. The mechanics are the same regardless of trade; only the categories of income and expense you record will differ. HMRC generally combines income across your self-employment sources when assessing whether you are in scope.
If you let property
A common misconception is that the obligations multiply per rental property. They don't — HMRC assesses and expects reporting at the level of the individual landlord, with property income from across your properties brought together. Rent received is the obvious income; deductible running costs such as repairs, insurance and letting-agent fees are recorded as expenses. A landlord with three properties records rent and costs for each address as they occur, and their software brings the totals together into one combined quarterly update, not three separate ones.
Frequently asked
Does Making Tax Digital for Income Tax apply to limited companies?
No. Making Tax Digital for Income Tax is for individuals with qualifying income from self-employment and/or property. Limited companies pay Corporation Tax, which is a separate regime. VAT-registered businesses of any structure may be within Making Tax Digital for VAT instead.
Do I need an accountant to comply?
Not necessarily. Making Tax Digital for Income Tax is designed to work with compatible software rather than requiring professional filing on your behalf, though many people still choose to work with an accountant for wider tax advice.
What if I have more than one self-employed business, or a business and property?
HMRC combines your qualifying income across self-employment sources and property to decide whether you are in scope. Once in scope, self-employment and property records are generally kept and reported separately. See the guide on self-employment and property income together.
Do quarterly updates replace my Self Assessment tax return?
No. Quarterly updates are summaries sent during the tax year. You still submit your tax return after the tax year ends. See the year-end return guide for the distinction.
Read HMRC's official guidance ↗
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