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Apr 2026
MTD for Income Tax is live
£50k
Current qualifying income threshold
4/yr
Quarterly updates required
Year end
Final declaration replaces Self Assessment
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Hi! I'm the Clear Books MTD assistant. Ask me anything about Making Tax Digital, whether you're a sole trader, a landlord or an accountant.

Questions asked today: 0 General information, not tax advice

Answers are general information to help you understand Making Tax Digital. They are not personal tax advice, so always check your own situation with HMRC or a qualified accountant before you act.

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The road to Making Tax Digital

MTD rollout timeline.

Making Tax Digital is arriving in phases. Here are the key dates every sole trader and landlord needs to know.

  1. April 2019

    MTD for VAT begins for businesses above the VAT threshold. Clear Books supported it from day one.

  2. April 2022

    All VAT-registered businesses must follow MTD rules, including those voluntarily registered below the threshold.

  3. April 2025

    MTD for Income Tax opens to early adopters ahead of the mandatory start date.

  4. April 2026

    MTD for Income Tax is mandatory for sole traders and landlords earning over £50,000. Clear Books is ready.

  5. April 2027

    The threshold drops to £30,000. Sign up now to be ready well in advance.

  6. April 2028

    The threshold drops again to £20,000, bringing in many more sole traders and landlords.

The essentials

The key MTD rules explained.

Everything you need to do under Making Tax Digital, and how Clear Books handles it for you.

Digital record keeping

Keep digital records of all your income and expenses. On a paid plan, connect your bank and your records update as you go.

Quarterly updates

Send year-to-date income and expenses to HMRC four times a year. Clear Books reminds you and submits with one click.

Final declaration

At year end you file a final declaration instead of a traditional Self Assessment. Clear Books brings your figures together for you.

Late-submission penalties

HMRC uses a points-based late-submission system, the same approach as MTD for VAT. Deadline reminders keep you clear of points.

Compatible software

You must use HMRC-recognised software. Clear Books is recognised for both MTD for VAT and MTD for Income Tax.

Exemptions

Some people qualify for an exemption, for example if they are digitally excluded. You apply to HMRC directly to be considered.

Common questions

MTD, FAQ.

What is Making Tax Digital?
Making Tax Digital is HMRC's programme to move tax record-keeping and submissions online. It requires businesses and individuals to keep digital records and submit updates using compatible software. It already applies to VAT-registered businesses, and since April 2026 it also applies to sole traders and landlords earning over £50,000.
Do I need to register for MTD if I earn £45,000?
Not yet. The current threshold is £50,000. If your qualifying income is below that, you are not required to join until April 2027, when the threshold drops to £30,000, or April 2028, when it drops to £20,000. Signing up to Clear Books now means you are ready well in advance.
How do quarterly updates work?
You send HMRC a summary of your income and expenses four times a year. Each update shows your year-to-date totals, so it is not four separate tax returns. With Clear Books your data is already there, so you review the figures and submit with one click.
Can I use a spreadsheet for Making Tax Digital?
You can, but only alongside bridging software that connects your spreadsheet to HMRC. Purpose-built MTD software like Clear Books is simpler, faster and less error-prone, and there is a free plan for sole traders with simple affairs.
What happens if I miss a quarterly update?
HMRC operates a points-based late-submission system, similar to MTD for VAT. Getting set up early, and letting Clear Books remind you of every deadline, means you should never pick up a point.
Is there free MTD software available?
Yes. Clear Books offers a free plan for sole traders and landlords with simple tax affairs, including one-click MTD quarterly updates and no transaction limits. See our free MTD software.
Is Clear Books recognised by HMRC?
Yes. Clear Books appears on HMRC's official list of MTD-compatible software for both VAT and Income Tax Self Assessment.
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