Making Tax Digital: the questions people are actually asking, answered

Making Tax Digital for Income Tax is two quarters old. The first update was due on 7 August, the second is due on 7 November, and the letters for the April 2027 wave are starting to land. The official guidance is thorough but long, so most people ask a forum instead.

We read the threads on MoneySavingExpert, UK Business Forums, the OpenRent landlord forum and AccountingWEB and picked the questions that come up again and again. Each one is quoted as posted (some date from 2025, when the rules were still settling), and each answer is checked against HMRC's guidance on GOV.UK as it stands in October 2026.

1. "I already file online. Isn't that digital?"

A part-time self-employed poster on MoneySavingExpert (September 2025) files four figures a year through HMRC's website and could not see what needed to change: "I certainly don't want to start messing around with calculating anything more often."

Filing the Self Assessment form on HMRC's website is not what "digital" means here. MTD asks for three things. Your income and expenses are recorded in software as they happen (a spreadsheet is allowed, but only with bridging software bolted on to send the figures). Every quarter the software sends HMRC the running totals. And the year-end return is submitted through that software too: HMRC's guidance is explicit that you "must then submit your tax return using Making Tax Digital for Income Tax software", and HMRC does not supply the software.

Whether it applies to this poster at all depends on the next question. Someone whose gross self-employment income sits near the personal allowance is below every threshold announced so far.

2. "Is the threshold turnover or profit?"

An online seller on UK Business Forums (May 2025) had the HMRC letter, about £85,000 of sales and about £22,000 left after product costs: "will HMRC be using my turn over figure or how much income I earned after costs?"

Turnover. HMRC's definition of qualifying income is your total income from self-employment and property, "before expenses (also known as turnover)". So this seller was in from April 2026, however thin the margin.

Three points follow from that:

• Trade and property are added together. HMRC's own example is £25,000 of rent plus £27,000 of self-employment income, giving £52,000 and a place in the first wave.
• An earlier return decides each wave. Your 2024/25 return set the £50,000 test for April 2026. Your 2025/26 return (the one due by 31 January 2027) sets the £30,000 test for April 2027. Your 2026/27 return sets the £20,000 test for April 2028.
• HMRC writes to you, but the letter is not the trigger. The guidance says that not receiving a letter does not remove your responsibility to check. If you traded for only part of the year, HMRC annualises the figure: six months of trading is doubled.

3. "Do savings interest, my pension or my salary count?"

A seller on MoneySavingExpert (August 2025) had been told by their accountant that savings interest pushed them over the line. Later in the same thread, a sole trader on around £20,000 had been told the State Pension did the same. A reply put it plainly: "Only income from business and/or property is relevant for MTD itsa."

The reply is right. HMRC's list of what does not count towards qualifying income includes employment income, State and private pensions, dividends (including from your own company) and your share of partnership profits. Savings interest is neither trading nor property income, so it does not count either. All of it still goes on the year-end return, and HMRC pre-fills some of it (PAYE income, pensions, state benefits) for you to check.

Two things do count that people miss: foreign property income if you are UK resident, and income from a bare trust. If you are getting conflicting figures from different people, the fix is simple. Look at the gross figures on your last filed return and apply the definition above.

4. "Will I have to pay tax every quarter?"

The opening post of an OpenRent landlord thread (February 2025) asked whether "landlords will have to pay rental income tax every quarter ?" Another landlord replied that if so it was "not a very attractive offer, especially for those with tight cashflow."

No. HMRC's guidance on the year-end return says MTD "will not change the way you pay tax or the dates that payments are due". The 31 January balancing payment and the two payments on account in January and July carry on exactly as before. A quarterly update is a set of totals with no payment attached.

What you do get is a running estimate of the bill in your software after each update. For anyone who has ever been surprised in January, that is the one part of MTD worth having.

5. "My wife and I own a flat jointly, about £10,000 each. Are we in?"

From the same OpenRent thread: "I have a property owned jointly with my wife, and our annual rental income works out just over £10,000 each."

Only your own share counts. HMRC's example is a property earning £50,000 split equally, which gives each owner £25,000 of qualifying income. At £10,000 each this couple is under every threshold announced, including the £20,000 one from April 2028, unless either of them has other self-employment or property income that takes their gross total over the line.

Joint owners who are in the regime get a concession. HMRC's quarterly update guidance lets you report income only for a jointly let property during the year and add the expenses after 5 April by resending the fourth update before the return goes in. That matters when one owner holds the receipts and the other does not.

6. "I'm paid through online platforms. There are no invoices. Won't this be far more admin?"

A poster on MoneySavingExpert (March 2025) is paid several times a week in US dollars through PayPal, at rates the platforms set, and currently declares one annual total: "This sounds like it's going to be at least 1,000 times more admin than I currently have to do."

Less than feared, if the set-up is right. A digital record under MTD is three things per transaction: the amount, the date and the category. Nothing in the rules requires an invoice. A quarterly update is the total for each category, HMRC does not receive the individual transactions, and the guidance says "You do not need to make any accounting or tax adjustments before sending a quarterly update."

In practice that means one bank account for business receipts, connected to the software by a bank feed, with each payout categorised as it lands. Spreadsheets remain allowed ("if you use spreadsheets for your records, you can continue to use them") but need bridging software to file, which is where most spreadsheet set-ups become fragile.

Two cautions for this poster. Declaring only what was withdrawn to a sterling account is not the same as declaring what was earned, and that was true before MTD. And working fewer hours to stay under £30,000, which they floated, buys a year at most: the threshold reaches £20,000 in April 2028. Choose software from HMRC's list with that horizon in mind. Free tiers exist, usually with limits, and several forum regulars warned that "free" has a habit of ending once you depend on it.

7. "What happens if I miss a quarterly deadline?"

The UK Business Forums thread above spent a long time on this. One accountant posting there worked out that someone with two trades, a rental and a VAT registration could face up to 17 submissions a year, and another called the burden "horrendous" for anyone without good records.

The dates first. Standard quarters end on 5 July, 5 October, 5 January and 5 April, with updates due on 7 August, 7 November, 7 February and 7 May. Each update is cumulative from 6 April, so the one due on 7 November covers 6 April to 5 October, and a mistake in an earlier quarter is simply corrected in the next. An update is due for every business you run (each trade separately, all UK property together), and for every quarter, including a quiet one.

Then the penalties, which are where the forum confusion lives. For this first year HMRC's penalties guidance says: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year." That is a one-year easement, not a reprieve. All four updates still have to be sent before the year-end return can be submitted, and the 31 January return deadline and the payment deadlines carry their usual penalties and interest right now.

From 2027/28 the points system applies to quarterly updates as well. Each missed deadline is one point, four points is a £200 penalty, and every further miss is another £200. Below the threshold, points drop off 24 months after the missed deadline. At the threshold, you need twelve months of on-time submissions to clear them. Four extra deadlines a year is the real change: the cost of being disorganised has roughly quintupled.

8. "My software says it submitted. HMRC says it didn't."

This one came from accountants rather than taxpayers. AccountingWEB's reporting on the first deadline and its aftermath (August 2026) is full of it. One practitioner asked "how can you be sure that you've made that submission?"; another called the whole thing "a nightmare and such a waste of time for everyone."

The first quarter had genuine teething problems: submissions failing part-way with generic errors, software showing "submitted" while the taxpayer's HMRC account showed nothing received, people registered for the wrong year, and the choice between standard and calendar quarters not updating on HMRC's side. HMRC logged several of these as live service incidents. None of it was the taxpayer's fault, and this year's easement means a late first or second update costs nothing.

Three habits protect you regardless. Keep the software's confirmation for every update and check that your HMRC online account shows it. Decide between standard quarters and calendar quarters (1 April to 31 March accounting periods) before you send your first update, because HMRC's guidance says you cannot change it for the rest of the tax year once an update has gone. And remember the figures are cumulative, so a wrong number is fixed in the next update, not by frantic resubmission.

9. "I'm not good with computers. Can I opt out?"

Back on MoneySavingExpert, one reply to the first question was blunt: "If I'm expected to do more than that I might just retire." A newer poster in April 2026 had never used software and said simply that "this is worrying me".

There is an exemption for the digitally excluded. HMRC's examples are an age, health condition or disability that stops you using a computer, tablet or smartphone, a religious belief incompatible with digital communications, and having no internet access where you live or work with no reasonable alternative. Each case is decided individually. Being used to paper, being unfamiliar with accounting software, having few records or the time and cost involved are listed as reasons that will not be accepted on their own. Some people are exempted automatically from their 2024/25 return; everyone else applies. If you are exempt you still file a Self Assessment return as now.

The other route is the one most people on these threads eventually reach. If an agent keeps your digital records in compatible software and files the updates and the return for you, the requirement is met. You hand over bank statements and receipts the way you always have; the software sits with us.

Where that leaves you

If your gross trading and rental income was over £50,000 on your 2024/25 return, you are in now and the second update is due on 7 November. If it was over £30,000 on the return you are about to file for 2025/26, April 2027 is your date, and the return itself is what tells HMRC. Our Making Tax Digital service covers the software, the records and all five submissions a year; our earlier guide covers what to do first, and the 2026/27 key dates are in one place.

This article is general information, not advice for your specific circumstances. For advice you can act on, book a free consultation or call us on 0151 944 4342.