Making Tax Digital: what UK freelancers need to know (2026)

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC's plan to move the UK tax system online. If you're in scope, you keep digital records throughout the year and send HMRC a quarterly update using compatible software. You still file a tax return at the end of the year.

MTD has been rolling out in stages. VAT-registered businesses have been using it since 2019. Income Tax followed on 6 April 2026, which means freelancers and sole traders are now part of it.

The goal, according to HMRC, is to reduce errors, make tax easier, and give people a clearer picture of what they owe throughout the year. Whether it actually achieves that remains to be seen, but it's happening regardless.

Who does MTD affect?

MTD for Income Tax is being introduced in stages, based on your qualifying income (self-employment and property income before expenses):

• From 6 April 2026: over £50,000 in the 2024/25 tax year
• From 6 April 2027: over £30,000 in the 2025/26 tax year
• From 6 April 2028: over £20,000 in the 2026/27 tax year, according to HMRC's guidance

If you're a sole trader or landlord over these thresholds, you're in scope. Partnerships and limited companies aren't part of this rollout.

Not sure if you're affected? Check your qualifying income: that's your total income from self-employment and property before expenses and tax, not your take-home pay.

What you'll need to do

MTD introduces three requirements for freelancers in scope:

1. Keep digital records

You'll need to keep digital records of your income and expenses, and send updates using MTD-compatible software. Spreadsheets alone won't cut it: they only work if they connect to HMRC through recognised bridging software.

Your records must include:

• Business income (every invoice, payment received, and other income)
• Business expenses categorised by type (travel, equipment, software, etc.)
• VAT records if you're VAT-registered

2. Submit quarterly updates

Every quarter, you send HMRC an update. The deadlines are:

• Quarter 1 (6 April to 5 July), due by 7 August
• Quarter 2 (6 July to 5 October), due by 7 November
• Quarter 3 (6 October to 5 January), due by 7 February
• Quarter 4 (6 January to 5 April), due by 7 May

These quarterly updates are running totals of your income and expenses for the tax year so far. They're not tax returns and nothing is paid with them. Think of them as progress reports.

3. File your tax return

At the end of the tax year, you still file a tax return. Once you're in MTD, it goes through your MTD software. This is where you confirm your total figures, claim any remaining reliefs, and finalise what you owe.

The deadline is 31 January following the end of the tax year, the same as before.

How HelloNoa helps you prepare

The good news: if you're already keeping clean digital records of your invoicing and time, you're halfway there. The freelancers who'll struggle with MTD are the ones tracking income on scraps of paper and receipts stuffed in a drawer.

Here's how HelloNoa sets you up:

• Every invoice is digitally recorded: amounts, dates, client details, and payment status are all tracked automatically
• Time tracking links to invoices: your billable hours flow directly into invoice line items, creating a clear audit trail
• VAT is handled correctly: invoices include VAT at the right rate, with proper formatting for HMRC requirements
• Expenses are recorded too: log business costs as they happen, sorted into categories
• Client and project records: all your business relationships and project details are organised and searchable

HelloNoa doesn't send anything to HMRC, so you'll still need MTD-compatible software or your accountant for the updates themselves. What it gives you is records that are already digital and current when the deadline comes.

Common myths about MTD

"I need to pay my tax quarterly now"

No. Quarterly updates are information submissions, not payments. You still pay your tax as normal, typically through payments on account in January and July, with a balancing payment in January. MTD doesn't change when you pay, just how often you report.

"My accountant will handle everything"

Your accountant can submit the quarterly updates on your behalf, but you still need to keep digital records throughout the quarter. You can't dump a bag of receipts on their desk four times a year instead of once. The records need to be digital and up to date.

"I earn under £50,000 so I'm safe"

For now, maybe. If your qualifying income was over £30,000 in 2025/26, you start on 6 April 2027, and HMRC's guidance brings the threshold down to £20,000 from April 2028. Getting into good digital record-keeping habits now means you won't have to scramble when the threshold catches up with you.

"I can just use a spreadsheet"

Only if your spreadsheet connects to HMRC-compatible bridging software. In practice, this is clunky and error-prone. Purpose-built software is simpler and less likely to cause problems with HMRC submissions.

"MTD has been delayed so many times it'll never happen"

It's true that MTD for Income Tax was pushed back several times. But it started on 6 April 2026, and HMRC put the first group at more than 864,000 sole traders and landlords. It's here.

Timeline: what to do and when

• 6 April 2026: MTD for Income Tax began for qualifying income over £50,000
• 7 August, 7 November, 7 February, 7 May: quarterly update deadlines, every year
• 6 April 2027: threshold falls to £30,000, and late quarterly updates start earning penalty points
• 31 January 2028: first tax return through MTD software (for the 2026/27 tax year)
• 6 April 2028: threshold falls to £20,000, according to HMRC's guidance

What happens if you're late?

HMRC isn't giving penalty points for late quarterly updates in the 2026/27 tax year. From 6 April 2027:

• Late submission: points-based system (like driving licence points). Every late update or tax return adds a point. At four points you pay a £200 penalty, plus £200 for each late submission after that.
• Late payment: interest charges plus penalties that increase the longer payment is overdue.
• Inaccurate returns: penalties based on whether the error was careless, deliberate, or concealed.

The penalties are designed to be proportionate rather than punishing, but they add up quickly if you ignore them.

The bottom line

Making Tax Digital is here whether we like it or not. The freelancers who'll find it easiest are the ones who already keep clean digital records, every invoice tracked, every expense logged, every client payment recorded.

If that's not you yet, now's the time to start. Get your invoicing and record-keeping into a proper digital system, and MTD will be a minor admin adjustment rather than a major headache.

Sources: HMRC's guidance on GOV.UK on when you need to use MTD, sending quarterly updates and penalties, checked 16 October 2026. This article is general information, not tax advice.