Making Tax Digital
Making Tax Digital for Income Tax software
Making Tax Digital for Income Tax changes how sole traders and landlords keep records and report to HMRC. PactTax keeps your digital records from your bank feed and works out each quarter's figures for you.
What Making Tax Digital for Income Tax is
If you are a sole trader or landlord registered for Self Assessment, and your qualifying income is over the threshold, you must:
- keep digital records of your self-employment and property income and expenses
- send HMRC a quarterly update for each self-employment and property business
- submit your tax return using Making Tax Digital software, by 31 January after the end of the tax year
Making Tax Digital does not change how you pay tax or when payments are due.
Who must use it, and when
When you start depends on your qualifying income in an earlier tax year. HMRC checks the Self Assessment tax return you sent for that year, but you should check the figure yourself too: you must sign up even if you do not get a letter.
| Qualifying income over | In the tax year | You use it from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
Partnerships will need to use Making Tax Digital for Income Tax in the future, but HMRC has not set a date. You could be exempt if, for example, you are digitally excluded.
What counts as qualifying income
Qualifying income is your total income from self-employment and property, before expenses. This is your turnover, not your profit.
- If you were UK tax resident, it includes UK and foreign property income.
- If you were not UK tax resident, only UK property income and self-employment income on your UK Self Assessment return count.
- If you own a property jointly, only your share of its income counts.
- Employment income (PAYE), dividends, the State Pension and private pensions do not count.
- Your share of a partnership's profit does not count, though it still goes on your tax return.
Quarterly updates and the tax return
Each quarterly update covers the tax year so far, from 6 April to the end of the period. It sends totals for each income and expense category, not individual transactions. If you find a mistake, you correct it in the next update.
Updates are due on 7 August, 7 November, 7 February and 7 May. After the year ends, you submit your tax return by 31 January. See Making Tax Digital deadlines for every date and the calendar quarter option.
How PactTax helps
- Your bank feed brings in each transaction, and PactTax suggests its category. You confirm it, and the digital record is kept.
- Records are kept separately for your self-employment and your property income.
- Each quarter's totals are worked out from your records and shown line by line, ready to check.
- Every deadline is in one place, with a reminder before each is due.
It prepares your returns from your records for you to check; sending them from PactTax is not available yet.
PactTax prepares your Making Tax Digital for Income Tax updates from your records for you to check. Sending them to HMRC from PactTax is not available yet.
Sources
The rules on this page come from GOV.UK. This is general guidance, not advice for your situation: for a judgement call, ask a qualified accountant or tax adviser.
- Check if you're eligible for Making Tax Digital for Income Tax (GOV.UK, updated 26 March 2026)
- Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK, updated 11 September 2026)
- Use Making Tax Digital for Income Tax (GOV.UK, updated 16 October 2026)
- Use Making Tax Digital for Income Tax: create digital records (GOV.UK, updated 16 October 2026)
- Use Making Tax Digital for Income Tax: send quarterly updates (GOV.UK, updated 16 October 2026)
- Use Making Tax Digital for Income Tax: submit your tax return (GOV.UK, updated 16 October 2026)
Last reviewed 20 October 2026.
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