Making Tax Digital Is Live: HMRC's New Quarterly Filing Rules — and the Non-Resident Deferral Most Founders Miss

On 6 April 2026, the biggest change to UK Self Assessment in a generation quietly went live: Making Tax Digital for Income Tax (MTD IT). If you are caught by the new rules, your first-ever quarterly update is due by 7 August 2026 — barely a month away. Yet many non-resident founders still do not know whether the rules apply to them at all. Here is what HMRC's own guidance actually says, including a deferral for non-residents that most coverage misses entirely.

What Is Making Tax Digital for Income Tax?

MTD IT is a new way of doing Self Assessment for sole traders and landlords. Instead of one annual return prepared at the last minute, you must keep digital records in HMRC-compatible software and send a summary of your self-employment and property income and expenses every three months. You then finish the year by submitting your tax return through that same software.

Two things stay the same: you still submit one tax return per tax year, and you still pay your bill by 31 January following the end of the tax year. What changes is everything in between.

Who Is Caught in 2026 — and Who Comes Next

Whether you must use MTD IT depends on your "qualifying income" — and HMRC is phasing it in over three years. Under GOV.UK's published timetable, if your qualifying income was more than £50,000 on your 2024/25 tax return, you must use MTD IT from 6 April 2026. If it is more than £30,000 on your 2025/26 return, you join from 6 April 2027. And if it is more than £20,000 on your 2026/27 return, you join from 6 April 2028.

HMRC says it will write to you if your return shows you are over the threshold — but the same guidance is blunt that not receiving a letter does not excuse you. It remains your responsibility to check and sign up.

What Counts as 'Qualifying Income' — and the Good News for LTD Directors

Qualifying income is your total gross income (turnover before expenses, not profit) from self-employment and property combined. That "gross" point trips people up: a landlord with £52,000 of rent and £40,000 of costs is over the £50,000 threshold, even though the profit is small.

The good news for company owners: qualifying income does not include salary taxed under PAYE, dividends — including dividends from your own company — partnership profit shares, or pensions. So if your only UK income is the salary and dividends you take from your UK LTD, MTD IT does not apply to you at all. It only becomes your problem if you also have UK rental income or sole-trader income above the threshold.

The New Rhythm: Four Updates Plus a Final Return

For those mandated from April 2026, HMRC's timetable for the first year is: first quarterly update by 7 August 2026, second by 7 November 2026, third by 7 February 2027, fourth by 7 May 2027, and then your full tax return — with reliefs, allowances and other income added — by 31 January 2028.

The quarterly updates are summaries, not tax returns. Your software builds them from your digital records. But you cannot skip them: HMRC confirms you must send your quarterly updates before you can submit your year-end return.

The Non-Resident Nuance Most Articles Miss

If you were not UK tax resident, only two things count towards your qualifying income: UK property income, and any self-employment income you actually declared on your UK Self Assessment return. Foreign property and foreign self-employment income you have not declared to HMRC are ignored. A founder living in Dubai with a UK rental property and a consulting business at home is measured on the UK rent alone.

Even better, HMRC's guidance contains an explicit deferral: if you filed the SA109 residence pages with your 2024/25 return and expect to file them again for 2026/27, you will not need to use MTD IT before April 2027. Many non-resident landlords who are over the £50,000 threshold therefore get one extra year — but only if the SA109 position applies, so check yours before assuming.

Penalties: A Soft Landing, But Not a Free Pass

MTD IT comes with a new points-based penalty system: a late submission earns a point rather than an instant fine, and a penalty is charged only when you reach the points threshold. For the 2026/27 tax year, HMRC has confirmed it will not apply penalty points for late quarterly updates at all — a deliberate soft landing for year one.

Do not read that as optional, though. The updates must still be sent before your return can go in, and late payment penalties on the tax itself still apply — and they grow the longer you wait.

What You Should Do Now

Check your 2024/25 return: was your gross self-employment plus UK property income over £50,000? If yes and you are non-resident, check whether the SA109 deferral covers you. If you are mandated, choose HMRC-recognised software, sign up, and get your digital records started — the 7 August deadline for the first update is close. And if you are under the threshold today, watch the £30,000 and £20,000 steps coming in 2027 and 2028: MTD IT is coming for smaller incomes next.

Have Questions About Your Own Situation?

Whether MTD IT catches you depends on the details — your residence position, your income mix, and your thresholds. If you would like to talk it through with the MP Partner experts team, we are happy to help: no pressure, no hard sell, just clear answers.

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