Key takeaway: Making Tax Digital for Income Tax launched on 6 April 2026 for sole traders and landlords with combined income above £50,000. HMRC has granted a one-year soft landing on penalty points for the first four quarterly updates — meaning the points-based penalty system will not apply to late submissions in 2026/27 for this cohort. But the quarterly submission cadence is real, the deadlines are fixed, and practices that do not adapt their workflow now will face a compounding workload problem as the mandate extends to lower income thresholds in 2027 and 2028.
MTD for Income Tax has been in planning, consultation, and deferral for nearly a decade. Its arrival for the first cohort in April 2026 marks the beginning of a long transition that will eventually bring the majority of self-employed individuals and landlords onto quarterly digital reporting. For practices, the first year is both an operational challenge and a template-setting exercise — the workflows, client communication approaches, and software integrations established in 2026/27 will need to scale as the mandate expands.
The soft landing provision is genuinely useful: HMRC will not issue penalty points for late quarterly update submissions during 2026/27 for the first mandated cohort. This gives practices and clients time to embed the new process without the immediate pressure of penalties accumulating. But the soft landing is a one-year concession, not a permanent reprieve. The second cohort — those with income above £30,000 — joins the regime in April 2027, and from that point, penalty points will apply to late submissions for both cohorts.
What MTD ITSA Requires in Practice
The MTD ITSA obligations for mandated clients are more extensive than many initially anticipate:
Digital record-keeping. All income and expenses for the client’s self-employment and property businesses must be maintained in MTD-compatible software or a linked digital system from the start of the tax year. HMRC requires a digital link from the point of transaction capture to the quarterly update submission — the same digital link principle that applies to MTD VAT.
Quarterly updates. Four quarterly updates per year must be submitted for each source of business income. The quarters follow the tax year (April–June, July–September, October–December, January–March), and each update is due by the 7th of the second month after the quarter end: 7 August, 7 November, 7 February, and 7 May. Quarterly updates are cumulative — each submission overwrites the previous one, meaning corrections made in quarter two automatically update the year-to-date figures without a separate amendment process.
End-of-period statement (EOPS). After the tax year ends, the client must submit an EOPS for each income source, confirming the year’s figures and making any adjusting entries.
Final declaration. The final declaration replaces the self-assessment return. It combines all income sources — employment, investment income, pension income, and business income — and calculates the final tax liability. The final declaration must be submitted by 31 January following the tax year (the same deadline as the previous self-assessment return).
The Quarterly Workflow: What Practices Need to Build
The most significant operational change for practices managing MTD ITSA clients is the shift from one annual engagement to a minimum of six touchpoints per year (four quarterly updates, one EOPS, one final declaration). For many practices, this represents a tripling or more of the annual workload per affected client — which, for a client base of 100 mandated clients, is a substantial workflow increase.
The practices adapting most successfully are those that treat quarterly updates as a client-managed bookkeeping review rather than a practice-prepared submission. Where the client maintains their records in MTD-compatible software (such as BrightBooks for sole trader clients), the quarterly update can be generated and submitted by the client themselves, or submitted by the practice after a brief review — rather than requiring the practice to compile the figures from scratch each quarter.
For clients who are not keeping digital records — or whose records are maintained in a system that is not linked to the quarterly update — the practice must do more of the work. Identifying which clients are in this position, and having a migration conversation with them, is the most important practice development activity in the first year of the mandate.
The Soft Landing and What It Does Not Cover
HMRC’s soft landing for the first cohort in 2026/27 means that no penalty points will be issued for late quarterly updates during the first year. This applies only to quarterly updates — the EOPS and final declaration are not within the soft landing, and the normal late filing penalties apply to those.
The soft landing also does not apply to the second cohort when it joins in April 2027. Practices with clients in both cohorts will be managing penalty risk for the 2027 cohort from day one of their mandate, even while the 2026 cohort still benefits from the concession.
The most effective use of the soft landing period is to embed the quarterly workflow — client communication, record review, update submission — before the penalty clock starts. A practice that uses 2026/27 to develop and test its quarterly submission process is well positioned for 2027/28. A practice that treats the soft landing as permission to continue operating as before will face the same disruption in 2027 that it avoided in 2026.
How BrightTax and BrightManager Support the MTD ITSA Workflow
BrightTax handles the MTD ITSA submissions for sole trader and landlord clients — quarterly updates, end-of-period statements, and the final declaration — through HMRC’s MTD-compatible API. The cumulative quarterly update structure means that each submission in BrightTax builds on the prior one, with adjustments carried forward automatically. The final declaration pulls together all income sources and produces the complete tax calculation.
BrightManager tracks the four quarterly deadlines for every MTD ITSA client, alongside the EOPS and final declaration deadlines. Rather than managing six deadlines per client manually across a client base of potentially dozens of mandated clients, practices using BrightManager have a centralised deadline view that shows which submissions are due, which are in progress, and which have been filed — with automated reminders generated before each deadline approaches.
The combination of BrightTax for submissions and BrightManager for deadline tracking gives practices the infrastructure to scale the MTD ITSA workflow as the mandate expands — without a proportionate increase in administrative overhead.
Frequently Asked Questions
Who is in the first MTD ITSA cohort and when did they join?
Sole traders and landlords with combined income from self-employment and property above £50,000 per year are mandated to use MTD ITSA from 6 April 2026. This is determined by the income reported on the 2024/25 self-assessment return. The second cohort (income above £30,000) joins from April 2027.
What is the soft landing for the first cohort in 2026/27?
HMRC has confirmed that no penalty points will be issued for late quarterly update submissions during 2026/27 for the first cohort. This means that late quarterly updates in the first year will not accumulate points under the points-based penalty system. The soft landing does not apply to the end-of-period statement or final declaration, and it does not apply to the second cohort from April 2027.
What are the quarterly update deadlines for 2026/27?
The four quarterly updates are due: 7 August 2026 (April–June quarter), 7 November 2026 (July–September quarter), 7 February 2027 (October–December quarter), and 7 May 2027 (January–March quarter). Each deadline is the 7th of the second month after the quarter end.
Are quarterly updates cumulative?
Yes. Each quarterly update overwrites the previous submission. If a figure is corrected in quarter two, the updated year-to-date total is reflected in the quarter two submission and all prior period figures are updated. There is no separate amendment process for prior quarters — corrections are carried forward in the next update.
How does the end-of-period statement differ from the quarterly update?
The quarterly update reports cumulative income and expenses for the business in real time. The end-of-period statement (EOPS), submitted after the tax year ends, is where the client confirms the year’s figures, makes any adjusting entries (such as capital allowance claims), and signs off the business income ready for the final declaration. The EOPS is a separate, more detailed step than the quarterly update.
BrightTax manages the full MTD ITSA submission workflow — quarterly updates, end-of-period statements, and final declarations — through HMRC’s MTD-compatible API. BrightManager tracks all six annual deadlines per client with automated reminders, giving practices the visibility to manage the new quarterly cadence without missing a submission. Find out more about BrightTax or BrightManager, or speak to your account manager.
