Making Tax Digital for Income Tax for agents

Which clients are in scope?

A client needs Making Tax Digital for Income Tax when they are a sole trader or landlord registered for Self Assessment, they have income from self-employment or property or both, and their qualifying income is over the threshold for the year. HMRC also says they must have submitted a tax return in the last two years.

What counts as qualifying income?

Gross income before expenses, which HMRC also calls turnover, from self-employment and property together, taken from the tax return the client submitted for the earlier year HMRC checks.

Employment income, partnership profit shares, dividends, the State Pension and private pensions do not count. Nor do transition profits from basis period reform, qualifying care relief, one-off UK land transactions, REIT and PAIF income, or averaging relief.

How does joint property count?

Only the client's share counts. HMRC's example is a property jointly owned in equal shares with £50,000 of income, where each owner's qualifying income is £25,000. If the client only receives notice of their share after expenses, HMRC uses that figure.

Are partnerships included?

Not yet. HMRC says partnerships will need to use Making Tax Digital for Income Tax in the future and will set out the timeline later.

Can a client be exempt?

Yes. A client can apply for exemption, for example because they are digitally excluded, and HMRC also offers a temporary exemption. An agent can apply for a client, by phone on the Agent Dedicated Line or in writing, with the client's National Insurance number, name and address and the reasons. HMRC aims to reply within 28 calendar days.

How do I sign a client up?

Through HMRC's sign-up service, with the user ID and password of your agent services account. You need the client's permission, their full name, date of birth and National Insurance number, and for a sole trader the business name, address, nature of business and start date of each income source.

Do my Self Assessment authorisations carry across?

Yes. HMRC recognises existing Self Assessment client authorisations for Making Tax Digital for Income Tax. Check each one appears in your agent services account, and add it if it does not. A client can also authorise you through a digital handshake.

What is the difference between a main agent and a supporting agent?

A client can appoint one main agent and any number of supporting agents. The main agent can do everything, including the end-of-year tax return. A supporting agent, such as a bookkeeper, can keep digital records and send quarterly updates, and cannot finalise the year.

What periods and deadlines apply?

Each update covers the tax year to date, so the second update runs from the start of the year to the end of the second quarter. A client can use standard quarters, which follow the tax year, or calendar quarters, which end on the last day of a month. The deadlines are the same for both.

Can I correct an update?

Because every update covers the year to date, the next one carries any correction. You can also resend the fourth quarterly update to fix errors, add joint property expenses or include Rent-a-Room relief, and HMRC says to resend it before making any tax adjustments.

Are there penalties for a late update?

HMRC will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. Penalty points still apply to a late tax return for that year.

What must each record show?

The amount, the date the income was received or the expense incurred, and its category. Making Tax Digital uses the same income and expense categories as Self Assessment.

Can a client keep records in a spreadsheet?

Yes. A spreadsheet counts as record-keeping software, linked to bridging software that sends the updates to HMRC. Corrections are made in the spreadsheet, then linked across again.

What is a digital link?

A way of moving data between software without retyping it: linked cells in a spreadsheet, importing and exporting XML or CSV files, automated data transfer, or an API. Once a record has been sent in an update, HMRC says it must not be moved by hand, which rules out copying, cutting and pasting it.

Can small businesses report expenses as one figure?

Yes. If turnover is below £90,000, the VAT registration threshold, the client only needs to record whether each transaction is income or an expense, and can report total expenses as one figure.

When is the tax return due?

By 31 January following the end of the tax year, as now. It brings together the self-employment and property figures with the client's other income.

What does the client still have to add?

HMRC adds employment income, pension information and some benefits itself. Savings interest, partnership profits, dividends and other gains HMRC does not already hold have to be added.