The Income Tax (Digital Obligations) Regulations 2026 came into force this year, and the first quarterly submission window has already opened. If you are a sole trader or landlord and your gross income from self employment or property meets the level HMRC sets, the rules now apply to you.
What the regulations actually require
Under the 2026 regulations, those who meet the income level are required to keep digital records and send quarterly updates to HMRC through compatible software. These are not optional summaries. They are formal submissions, and the obligation runs through the tax year.
The tax year is divided into four update periods. Each one has a deadline, and the first fell on 7 August 2026, covering the period from 6 April 2026 to 5 July 2026. If that deadline passed and you have not submitted, you are already late on your first quarter.
The first quarterly deadline under MTD for Income Tax has already passed. If you missed 7 August 2026, the question now is what you do before the next one.
Who the rules apply to
The 2026 regulations set out which sole traders and landlords must comply. If you earn above the income level from self employment, property, or a combination of both, the rules apply to you. The income figure that determines this is gross income before costs, not profit.
Some people are exempt. The regulations set out specific categories where the obligation does not apply, including those whose income falls below the level HMRC sets. There are also exemptions based on age and certain other conditions set out in the legislation. Whether an exemption applies to you depends on your specific figures and circumstances, so get in touch and we will confirm exactly where you stand.
The four quarterly deadlines
Each quarterly update covers a fixed period of the tax year. The four periods and their deadlines follow a set pattern running from April through to the end of March the following year. The 7 August 2026 deadline was the first of four for the 2026 to 2027 tax year.
Missing a deadline does not mean the obligation disappears. HMRC's system records which periods have been submitted and which have not. Gaps attract attention, and the end of year finalisation process, which confirms your tax position for the year, also cannot be completed properly if quarterly updates are outstanding.
What happens if you miss a deadline
For the 2026 to 2027 tax year, HMRC has confirmed a soft landing on penalty points: no points are issued for late quarterly updates during this first year. That concession applies only to quarterly updates and only for 2026-27. It does not cover the Final Declaration, which carries penalties from the outset, and it does not cover late payment of tax, which is subject to late payment penalties and interest in full from year one.
From 2027-28 onwards, the points-based penalty regime applies in full. Each missed quarterly update adds a point to your record. Once your points reach four, a £200 financial penalty follows. Points can also accumulate across tax years, so a pattern of late submissions compounds over time rather than resetting.
There is also the practical problem that falling behind on quarterly updates puts you further from your actual position with HMRC. Catching up is possible, but the further behind you fall, the more work is involved.
Compatible software and digital records
The regulations require digital record keeping, not just digital submission. Your records must be held in a form that your software can read and use to generate the quarterly update. A spreadsheet that you manually type figures from into a submission tool does not meet the requirement on its own, unless it is linked to compatible software in the way HMRC permits.
This is the part most people underestimate. Choosing software is not the last step. Making sure your records feed into it correctly is where the obligation actually lives.
The end of year process
Quarterly updates are not the end of the MTD obligation. After the fourth quarter closes, you must also complete a finalisation step, which confirms your income and any claims for reliefs or allowances for the tax year. This replaces the self assessment tax return for those who are mandated. The annual figures flow from the quarterly updates, so errors or gaps in those updates carry through to the finalisation.
If the quarterly figures are wrong, the end of year position is wrong. Correcting it after the fact takes more time than getting it right through the year.
Missing quarterly deadlines and uncertain records are the two things most likely to create problems under MTD for Income Tax. We handle both. If you want to know whether your current records and software meet the requirement, call us and we will go through it with you.