Over 1.2 million VAT registered taxpayers are already signed up to Making Tax Digital & HMRC is looking to bring in a whole lot more over the next couple of years. This change is going to shake things up for small businesses, sole traders and landlords when it comes to recording income and paying tax. For a lot of people, it means saying goodbye to spreadsheets and paper records and switching to a more streamlined digital way of doing things.
The MTD timeline lays out when all this will be happening and who’s got to follow the rules. It’s a useful guide for small business owners to get their heads round when they need to start using digital tools, when to send in their updates, and precisely how often they’re supposed to be reporting back to HMRC. If you’re not already aware of the MTD timeline, you risk missing deadlines and struggling to adjust when the rules finally apply to you.
The MTD timeline sets out the key dates and deadlines for Making Tax Digital, including when small businesses, sole traders & landlords must start keeping proper digital records and sending quarterly updates using approved software.
Below we break down the MTD timeline in plain speak, highlight the key dates, and tell small business owners just what they need to do next to stay compliant and ready for action.
What Is the MTD Timeline?
The MTD timeline is HMRC’s schedule for rolling out Making Tax Digital across different types of taxpayers. It shows when small businesses, sole traders and landlords must start keeping digital records and sending updates through compatible software instead of filing one yearly return in the traditional way.
At its core, the MTD timeline moves tax reporting from a once a year task to a more regular process. Instead of waiting until the end of the tax year, small firms will submit updates every quarter and then confirm their final position at year end. This approach is designed to reduce errors and give a clearer picture of tax throughout the year.
The MTD timeline includes two main phases. The first is MTD for VAT, which is already in place for most VAT registered small businesses. The second is MTD for Income Tax, which will start from April 2026 and expand in later years. Understanding both parts is important, as they show how HMRC is gradually moving all taxpayers towards digital reporting.
Key MTD Timeline Dates You Need to Know
The MTD timeline includes several important milestones. These dates show when rules begin and when submissions are due. If you run a small business or work as a sole trader, you need to be aware of each stage.
| Date | Description |
| 6 April 2026 | MTD for Income Tax starts for sole traders and landlords earning over £50,000. Digital records and software become mandatory. |
| 7 August 2026 | Deadline for the first quarterly update covering April to July 2026. |
| 7 November 2026 | Deadline for the second quarterly update covering April to October 2026. |
| 31 January 2027 | Final Self Assessment deadline for 2025 to 2026 before full MTD transition. |
| 7 February 2027 | Deadline for the third quarterly update. |
| 7 May 2027 | Deadline for the fourth quarterly update, completing the first MTD cycle. |
| 6 April 2027 | MTD expands to include those earning over £30,000. |
| 31 January 2028 | First full tax return submitted through MTD software for 2026 to 2027. |
These dates form the core of the MTD timeline. Planning ahead helps small businesses avoid last minute pressure and ensures smooth compliance.
Has the MTD timeline Already Started?
Yes, the MTD timeline has already begun through MTD for VAT. This part of the system has been in place for several years and gives a clear idea of how the wider rollout works.
Since April 2019, VAT registered small businesses above the threshold were required to follow MTD rules. From April 2022, this expanded to include all VAT registered small firms, even those below the threshold.
This means many small businesses are already familiar with:
- Keeping records in digital format
- Using MTD compatible software
- Submitting VAT returns directly to HMRC
The VAT phase of the MTD timeline has helped small firms to start moving their operations towards more digital systems. And in the process, it’s also shown that while there’s a bit of a learning curve at the start, everything does get a lot easier once you get your systems all set up.
For those that haven’t yet got a foot in the door with income tax changes, VAT is actually a pretty useful place to start. It really drives home the importance of getting the right tools in place & keeping your records in order throughout the year.
How the MTD Deadlines Work (Quarterly vs Annual)
The MTD timeline has completely turned things upside down for small businesses when it comes to reporting their income to HMRC. In the old system, most people would just do a years accounts at the end and then dump it all in to a single return. This used to lead to a right old rush up to the deadline and more often than not, some important info would get left out or some dreadful mistakes would get made.
With the MTD timeline, it’s all about spreading it out across the year. Small businesses are now sending off updates every quarter & then a final submission at the end of the tax year. And that approach helps keep your records bang up to date & makes tax reporting a heck of a lot more manageable.
Here is a detailed comparison
| Feature | Quarterly Updates | Annual Submission |
| Frequency | You submit updates four times a year, usually every three months. This keeps your records current and avoids a large backlog of work. | You submit once a year after the tax year ends. This is the final step in confirming your tax position. |
| Purpose | These updates show a summary of your income and expenses for each period. They help HMRC understand how your business is performing during the year. | This submission confirms your full year figures. It includes adjustments, allowances, and final calculations of your tax. |
| Deadline | Each update is due shortly after the end of the quarter, usually within one month. These deadlines are spread out, making them easier to manage. | The final deadline is 31 January. This gives you time to review and confirm all details before submission. |
| Detail Level | You only need to submit summary figures, which makes the process quicker and less detailed. | You provide complete and accurate details, including corrections and claims, to finalise your tax liability. |
Quarterly updates are not the same as paying tax four times a year. They are only for reporting. They help you keep track of your finances and avoid surprises at the end of the year.
The annual submission remains important because it ensures everything is correct. It allows you to make adjustments and confirm your final tax position.
Overall, this system under the MTD timeline helps small firms stay organised, reduces last minute pressure, and improves accuracy.
What UK Businesses Need to Do Next
Moving to the MTD timeline is not just about meeting deadlines. It also requires small businesses to change how they manage their records and reporting. Taking the right steps early can make the process much easier and help avoid stress later.
Here is a detailed action plan to follow:
Getting a Head Start on MTD
Check if you fit the MTD timeline by taking a look at your total income from self employment or property. If it hits the mark, you’ll need to follow the MTD rules, knowing this early gives you a chance to get your act together before it’s too late.
Selecting Your Software ,
You will need MTD compliant software to be able to send in your updates, so find some that’s easy to use and suited to your business needs. It should allow you to track income and expenses and also send the data straight to HMRC.
1.Ditch those Paper Records
If you’re still using old-fashioned paper records or manual spreadsheets, now’s the time to make the switch to digital records. Include all income and expenses in your digital records. Keeping them up to date will make the quarterly reporting thing a lot easier.
2.Stay on Track with Deadlines
The MTD timeline is packed with deadlines throughout the year, miss one, and you might face a penalty. Set reminders or have your software alert you to stay on top of it all.
3.Getting a Grip on Your Reporting Cycle
Get a handle on how your accounting periods work. Knowing when each quarter starts and ends will take a lot of stress out of getting your updates in on time, without any confusion creeping in.
4.Don’t be Afraid to Ask for Help
Working with an accountant can be a lifesaver, they can guide you through the setup process, make sure everything is spot on, help you review your records and submissions to avoid errors down the line.
5.Test Your System Before You Start
Before your first deadline, give your system a bit of a test. Check that your software is working properly, that your records are accurate, and you know exactly how to send in your updates, don’t get caught out at the first hurdle.
Taking these steps will help small firms adjust smoothly to the MTD timeline and avoid unnecessary complications.
How MTD Compares to Traditional Self Assessment
The MTD timeline introduces a different way of managing tax compared to the traditional Self Assessment system. Understanding the difference helps small businesses see what changes to expect.
| Feature | MTD System | Traditional Self Assessment |
| Record Keeping | All records must be kept digitally using approved software. This ensures accuracy and consistency. | Records can be kept on paper or spreadsheets, which can increase the risk of errors. |
| Reporting | You submit quarterly updates and a final annual submission. This spreads the workload across the year. | You submit one return at the end of the year, which can be time consuming and stressful. |
| Accuracy | Software reduces manual errors and helps keep records organised. | Manual entry increases the chances of mistakes or missing information. |
| Workload | Work is spread evenly throughout the year, making it easier to manage. | Most of the work is done near the deadline, leading to pressure and delays. |
| Visibility | You have a clearer view of your finances throughout the year. | You may not have a clear picture until the end of the year. |
The MTD timeline creates a more regular and structured system. While it may take time to adjust, it can help small businesses stay more organised and in control of their finances.
Common MTD timeline Mistakes to Avoid
As small businesses move towards the MTD timeline, there are several common mistakes that can cause problems. Being aware of these can help you avoid delays, penalties, and extra work.
1.Missing key dates
The MTD timeline includes several deadlines throughout the year. Missing even one can lead to penalties or late submission issues. Keeping track of all dates is very important.
2.Using incorrect software
Not all accounting tools are MTD compliant. Using the wrong software can prevent you from submitting updates correctly. Always check that your software is approved by HMRC.
3.Incomplete records
If your records are not accurate or up to date, your submissions may be incorrect. This can lead to further corrections and possible penalties. Keeping records updated regularly helps avoid this issue.
4.Delaying preparation
Waiting until the deadline to organise your records can create unnecessary stress. It also increases the chances of errors. Preparing early makes the process smoother.
5.Not asking for help
Trying to manage everything alone can lead to mistakes, especially if you are not familiar with the MTD timeline. Getting advice from an accountant can save time and prevent issues.
Avoiding these mistakes will make it easier to follow the MTD timeline and keep your small business compliant.
FAQs: Frequently Asked Questions
What are the deadlines for MTD?
Under the MTD timeline, you need to send updates four times during the year, usually after each three-month period. After the tax year ends, you then send a final submission by 31 January to confirm your full income and tax position. Keeping an eye on these dates helps you stay organised and avoid any penalties.
What is the threshold for MTD from April 2027?
From April 2027, the threshold reduces to £30,000. This means more sole traders and landlords will need to follow the MTD timeline.
When can I submit a 2025 to 2026 tax return?
You can submit your return by 31 January 2027. This will be the last tax year under the traditional system before full MTD reporting applies.
What are HMRC MTD rules?
HMRC requires small businesses to keep digital records and submit updates using MTD compliant software. These rules are part of the wider MTD timeline.
Does this timeline apply to Limited Companies?
At present, the MTD timeline for income tax applies to individuals such as sole traders and landlords. Limited companies are not yet included.
Will I pay tax quarterly under MTD?
No, the MTD timeline focuses on reporting, not payment. You will still pay tax annually unless HMRC introduces changes in the future.
Conclusion
The MTD timeline is changing how small businesses, sole traders and landlords handle their tax. It means keeping records digitally and sending updates more often. While it may take some time to get used to, it can help reduce mistakes and avoid last minute rush at the end of the tax year.
MyIVA supports small firms at every stage of the MTD timeline. From setting up digital systems to handling corporation tax filing, our team helps you stay compliant and organised. If you want to simplify your tax process and stay ahead of deadlines, speak to MyIVA today and get the support your business needs.
