Compliance
Making Tax Digital for Income Tax: Quarterly Updates & Digital Obligations from April 2026
New regulations as of 1 April 2026 require many UK unincorporated businesses and landlords to keep digital records, submit quarterly updates, and file annual returns with MTD-compatible software.
By NomadicTax Research Team • 5-8 min read • September 1, 2026
## What Are the Digital Obligations?
From **1 April 2026**, the **Income Tax (Digital Obligations) Regulations 2026** come into force. Among others, they require:
- Digital record-keeping using **MTD-compatible software**;
- Quarterly updates to HMRC rather than just annual Self Assessment filings;
- End-of-year digital tax return submission through compliant software. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksi_20260336_en.pdf?utm_source=openai))
## Who’s in Scope
This typically includes unincorporated businesses (sole traders, partnerships) and landlords who exceed certain income thresholds. Some categories are exempt (e.g., certain religious ministers, Lloyd’s underwriters, or those for whom digital record-keeping is demonstrably unreasonable) under specified conditions. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
## Key Features & Timeline
- **Effective date**: Begins 1 April 2026. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
- **Temporary exemptions** apply for the 2026-27 tax year for particular groups—trusts, visiting performers, qualifying foreign income regimes, etc. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
- Quarter-aligned reporting: You can opt for calendar quarter alignment if preferred. Corrections must go through software. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
## Practical Actions to Take Now
1. **Review your business or rental income** to check if it crosses thresholds that bring you into scope.
2. **Choose MT-compatible software** that supports quarterly updates and annual digital returns. Ensure it handles corrections, alignments, and temporary exemptions properly.
3. **Set up internal reporting systems** to prepare quarterly data: income, expenses, profits.
4. **Keep supporting documents** digitally stored and organised—they may be needed for amendments or HMRC audits.
## Sample Scenario
**David**, a landlord with two rental properties earning £45,000/year, is now within the threshold for digital obligations. From 1 April 2026, he’ll need to:
- Record all rental income and allowable expenses digitally;
- Send quarterly updates (e.g. Q1 ending 30 June, Q2 ending 30 September, etc.);
- File his annual return digitally at year-end.
- Use software that accommodates exemptions if any of them apply (for example, if he rents in special situations, or has foreign/overseas income involved).
## Benefits & Risks
**Benefits:**
* More accurate tax liability forecasts; fewer surprises at year end.
* Reduced errors from retrospective submissions; better alignment with HMRC data systems.
* Improved readiness for HMRC checks or compliance audits.
**Risks:**
* Initial cost of upgrading software or changing accounting workflows.
* Time investment: quarterly reporting is more frequent than annual.
* Penalties or non-compliance issues if deadlines or format requirements aren’t met.
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If you’re a business owner, landlord, or self-employed individual, begin preparations now—the transition to frequent, digital reporting is underway. Consult an accountant to ensure you’re using compatible tools and understand your obligations well in advance of April 2026.