Quick answer
Making Tax Digital for Income Tax has been mandatory since 6 April 2026 for sole traders and landlords with qualifying income over £50,000. HMRC said on 12 August that over 436,000 had sent their first quarterly update and over 570,000 had signed up. The next update is due by 7 November 2026, and the threshold falls to £30,000 from April 2027 and £20,000 from April 2028. For accountancy practices, that means a quarterly workload, more clients each year and a case for investing now in people, software and, for some firms, client books.
Where Making Tax Digital for Income Tax stands
Since 6 April 2026, sole traders and landlords whose qualifying income was over £50,000 on their 2024 to 2025 return have had to keep digital records and send HMRC a quarterly update from compatible software. The threshold falls to £30,000 from 6 April 2027 and to £20,000 from 6 April 2028 (GOV.UK: check if you’re eligible).
The first deadline was 7 August 2026. In a press release on 12 August, HMRC said over 436,000 sole traders and landlords had sent their first quarterly update and over 570,000 had signed up for the service (HMRC press release). HMRC’s published timetable puts the remaining 2026 to 2027 deadlines at 7 November 2026, 7 February 2027 and 7 May 2027, with the first final declaration due by 31 January 2028 (HMRC: MTD for Income Tax dates).
What it means for an accountancy practice’s workload
HMRC expects 75% of people to use an agent for Making Tax Digital in 2026, according to its July update for agents (HMRC agent update). For practices, that turns a once-a-year Self Assessment cycle into four reporting points a year plus the final declaration, for every client in scope.
Three pressures follow:
- Capacity. Quarterly updates spread work across the year, but they also add touchpoints, chasing and review for each client.
- Growth in scope. The fall to £30,000 next April and £20,000 in 2028 brings many smaller clients into the regime, often those with the least appetite for software.
- Pricing. Firms that have not yet repriced for quarterly work risk carrying the extra cost themselves.
There is a short grace period. HMRC has confirmed there will be no penalty points for late quarterly updates in 2026 to 2027. From 6 April 2027, each missed quarterly deadline earns one point, and four points bring a £200 fixed penalty.
Investing in people and systems
Most firms are responding with some mix of new hires, better software and changes to how client work flows through the practice. Recruitment finance can spread the cost of bringing in qualified staff ahead of the April 2027 intake, so the salary is in place before the fees arrive. IT and software finance covers practice management systems, bridging tools and hardware, and our guide to equipment finance, hire purchase and leasing explains the options.
Where the investment is part of a wider plan, our page on growing a practice sets out how firms usually fund it, and working capital can smooth the gap between taking on work and billing for it.
Consolidation, fee blocks and succession
Quarterly reporting raises the fixed cost of serving each client. For some sole practitioners and smaller firms nearing retirement, that may be the prompt to sell a client book rather than invest. For firms that have already built the systems and the team, it can be a moment to buy.
Fee block finance is designed for buying a client book, and our guide to fee block finance covers retention clauses, deferred consideration and how lenders look at recurring fees. For a whole-firm purchase, see practice acquisition finance; for partners planning an exit, succession finance.
Clients’ cash flow matters too. Quarterly updates do not change when Self Assessment tax is paid, and 31 January remains the payment date. Where a client, or a partner in the firm, needs to spread that bill, partners’ tax funding is one route.
Practical steps before 7 November
- Check which clients missed the first update and contact them before the second.
- Identify clients with qualifying income between £30,000 and £50,000 on their 2025 to 2026 return: they are in scope from April 2027.
- Review engagement letters and fees for quarterly work.
- Plan any hires and software spend now, not in March.
We search the market across 300+ lenders and approach those that understand accountancy practices. Instant Quotes shows your matches in minutes, with no credit check.
Common questions
When is the next Making Tax Digital quarterly update due?
HMRC’s timetable gives 7 November 2026 for the second quarterly update of 2026 to 2027, then 7 February 2027 and 7 May 2027.
Are there penalties for missing a quarterly update this year?
HMRC has said there will be no penalty points for late quarterly updates in 2026 to 2027. Penalties for late tax returns and late payment still apply. From 6 April 2027, each missed quarterly deadline earns a point, and four points bring a £200 penalty.
Who comes into Making Tax Digital next?
Sole traders and landlords with qualifying income over £30,000 on their 2025 to 2026 return must use it from 6 April 2027, and those over £20,000 on their 2026 to 2027 return from 6 April 2028.
Can an accountancy practice finance new staff or software for MTD?
Often, yes. Recruitment finance, IT and software finance and working capital are all commonly used, subject to status and lender criteria. We arrange this by approaching suitable lenders on your behalf.
Official sources
Published 15 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.
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