Making Tax Digital for Self-Employed 2026: What Gig Workers Must Do
Making Tax Digital for Income Tax (MTD for IT) requires self-employed workers earning over £50,000 to keep digital records and submit quarterly updates to HMRC from April 2026. Most delivery drivers earning under £50,000 are not yet affected but will be from April 2027 (£30,000 threshold) or later. If you are below the threshold, standard Self Assessment still applies.
Key Takeaways
- MTD for Income Tax starts April 2026 for qualifying income over £50,000
- Qualifying income is gross earnings before expenses — not profit
- Most delivery drivers earning under £50,000 are not affected until April 2027 or later
- MTD requires HMRC-compatible software and four quarterly submissions per year
- A points-based penalty system replaces automatic fines for late submissions
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD for IT) is HMRC's programme to move self-employed workers and landlords from annual Self Assessment returns to a system of digital record-keeping and quarterly reporting.
Under MTD, instead of submitting one annual return, you will:
- Keep digital records of all income and expenses throughout the year
- Submit quarterly updates to HMRC — four times per year
- Submit an end-of-period statement confirming your annual figures
- Submit a final declaration by 31 January, replacing the annual Self Assessment return
"Making Tax Digital for Income Tax will require businesses and landlords to keep digital records and send quarterly updates to HMRC." — HMRC MTD Guidance — GOV.UK
Who Does MTD for Income Tax Affect in 2026?
The rollout is phased by income level. The dates confirmed by HMRC are:
| Start Date | Qualifying Income | Who Is Affected |
|---|---|---|
| April 2026 | Over £50,000 | Self-employed and landlords above threshold |
| April 2027 | Over £30,000 | Wider self-employed group |
| TBC | Over £20,000 | Further rollout — date not yet confirmed |
| Below £20,000 | Not yet required | Standard Self Assessment continues |
What this means for most delivery drivers
A driver earning £26,000 gross from Deliveroo or Uber Eats is below the £30,000 threshold and will not be required to use MTD until the third phase at earliest. Standard Self Assessment and the 31 January deadline still apply.
What Counts as Qualifying Income for MTD?
Qualifying income is your gross income from self-employment and property combined — before any expenses or deductions. It is not your taxable profit.
- A Deliveroo rider earning £28,000 gross: below £30,000 — not yet required
- A driver earning £35,000 from Uber Eats plus £18,000 from a rental property: £53,000 combined — affected from April 2026
- A gig worker earning £22,000 from multiple platforms combined: below £30,000 — not yet required
How Does MTD Work in Practice?
Once you are required to use MTD, the process each tax year works as follows:
- Sign up for MTD for Income Tax through your HMRC online account or via your software provider
- Use compatible software to record all income and expenses digitally throughout the year
- Submit a quarterly update to HMRC at the end of each quarter
- Submit an end-of-period statement confirming your annual figures after the tax year ends
- Submit your final declaration by 31 January — this replaces the Self Assessment return
- Pay any tax owed by 31 January as normal
Quarterly updates are summaries of your income and expenses — not tax payments. Your tax bill is still calculated and paid annually.
What Software Do I Need for MTD?
You must use HMRC-approved MTD-compatible software. Spreadsheets alone are not sufficient unless you use bridging software that connects them to HMRC's systems.
Popular MTD-compatible options for self-employed workers:
- QuickBooks Self-Employed — widely used, mobile app available
- FreeAgent — free with some business bank accounts
- Xero — suits drivers with higher turnover
- Coconut — designed specifically for gig workers and self-employed
- HMRC's free tools — limited options for the simplest cases
The full list is at GOV.UK — MTD Compatible Software.
What Are the MTD Penalties?
HMRC uses a points-based late submission penalty system. Each missed quarterly or annual submission earns one point. When you reach the threshold, a £200 fine is issued.
| Submission Type | Points Threshold | Penalty |
|---|---|---|
| Quarterly (MTD) | 4 points | £200 |
| Annual submission | 2 points | £200 |
| Each further missed submission | N/A | £200 each |
| Points reset after | 24 months of compliance | — |
Late payment of tax remains subject to separate interest and surcharge penalties, unchanged from the current system.
MTD Rollout Timeline for Gig Workers
April 2026 — Phase 1 (over £50,000)
Self-employed workers and landlords with qualifying income over £50,000 must join MTD. Register with HMRC and start using compatible software before 6 April 2026.
April 2027 — Phase 2 (over £30,000)
Threshold drops to £30,000. Drivers earning between £30,000 and £50,000 gross must join. Start preparing software and digital records during 2026.
TBC — Phase 3 (over £20,000)
Threshold expected to drop to £20,000. Date not yet confirmed by HMRC. Drivers earning £20,000–£30,000 should monitor GOV.UK announcements.
Making Tax Digital: Frequently Asked Questions
When does Making Tax Digital for Income Tax start?
MTD for Income Tax starts in April 2026 for self-employed workers and landlords with qualifying income over £50,000. Those earning £30,000–£50,000 follow in April 2027.
Does MTD apply to delivery drivers?
Only if their qualifying income exceeds the threshold. Most delivery drivers earn under £50,000 from self-employment, so they will not be required to use MTD until at least April 2027 or later. Voluntary sign-up is available now.
What is qualifying income for MTD purposes?
Qualifying income is your gross income from self-employment and property combined, before any expenses are deducted. It is not your profit — it is your total earnings before costs.
What software do I need for Making Tax Digital?
You must use HMRC-compatible software to keep digital records and submit quarterly updates. Options include QuickBooks, FreeAgent, Xero, and several free tools listed on the HMRC website.
How often must I submit under MTD?
Under MTD for Income Tax, you submit quarterly updates to HMRC four times per year. You also submit an end-of-period statement and a final declaration by 31 January after the tax year ends.
What happens if I do not comply with MTD?
HMRC uses a points-based penalty system. Each missed submission earns a penalty point. Once you reach four points for quarterly filers, a £200 penalty is issued. Further missed submissions cost £200 each.
Tax compliance specialist since 2017. Helped 5,000+ freelancers and self-employed workers navigate HMRC Self Assessment and UK gig economy tax rules.