Should I join Making Tax Digital early?
Updated 7 October 2026 · Advisor: Future You
This is a complete worked Executive Decision Brief for a sole trader or landlord below the current Making Tax Digital for Income Tax threshold, deciding whether to sign up before they have to. The board's view: if you will cross the threshold within a year or two, a voluntary practice year at the start of a tax year is worth having; signing up mid-year adds catch-up work for little gain. It is decision support, not tax advice: an accountant should confirm how the rules apply to you.
Cerno is a private AI boardroom that runs consequential decisions through a structured process and returns a brief like the one below. The scenario is illustrative: someone with a small sole trader business and a rental flat, whose combined turnover is about £24,000 a year. That is below the £30,000 threshold for April 2027, but above the £20,000 threshold that applies from April 2028.
Do not sign up part-way through this tax year. Move your records into compatible software now, then sign up voluntarily from 6 April 2027, giving a full practice year without penalties for late quarterly updates before it becomes compulsory from 6 April 2028.
- ›Combined self-employment and property turnover of about £24,000 a year.
- ›Self Assessment returns filed in each of the last two years.
- ›Records currently kept in a paper notebook and a bank statement folder.
- ›Turnover will stay above £20,000, so the April 2028 start applies.
- ›Suitable software is affordable and works for both income sources.
- ›The owner can keep records up to date each quarter.
Choose software that works with Making Tax Digital for Income Tax and covers both self-employment and property.
Keep this year's records in the software alongside the usual Self Assessment routine.
Sign up voluntarily and send quarterly updates for the full year.
Review: keep going, or opt out until it becomes compulsory.
The decision in plain terms
Making Tax Digital for Income Tax changes how sole traders and landlords report, not how much tax they pay. You keep digital records of income and expenses in compatible software, send a short quarterly update to HMRC, and submit your tax return through the software by 31 January as before.
It is being phased in by income. If you are below the threshold now, you have a choice: wait until you must, or volunteer and learn the routine while the stakes are lower. The question is whether the practice is worth the extra admin, and whether anything about volunteering costs you later.
The numbers that matter
Who must join, and when. Qualifying income is measured on your Self Assessment return for an earlier tax year:
- ›Over £50,000 on the 2024 to 2025 return: required from 6 April 2026
- ›Over £30,000 on the 2025 to 2026 return: required from 6 April 2027
- ›Over £20,000 on the 2026 to 2027 return: required from 6 April 2028
What counts. Qualifying income is your total income from self-employment and property before expenses. Employment income, your share of partnership profits as an individual partner, dividends, the State Pension and private pensions do not count.
Quarterly updates. With standard periods running from 6 April, updates are due by 7 August, 7 November, 7 February and 7 May. You can choose calendar quarters starting 1 April instead, with the same deadlines. Your tax return is due by 31 January after the tax year, and payment dates do not change.
Who can volunteer. You can sign up early if you are registered for Self Assessment and have submitted a tax return in the last 2 years. If you join part-way through a tax year, you must send any missed quarterly updates for the year so far.
Penalties for volunteers. While volunteering, you will not get penalties for missing quarterly update deadlines. You do move to points-based late submission penalties for tax returns: a threshold of 2 points, a £200 penalty when you reach it and £200 for each further missed deadline. You cannot go back to the old penalties once you have agreed to the new ones, even if you stop volunteering.
Penalties once required. For those required from April 2026, HMRC will not apply penalty points for late quarterly updates in 2026 to 2027. From later years, required users get a point for each missed quarterly update or return deadline, with a threshold of 4 points and a £200 penalty.
Records. You can keep records in a spreadsheet and send updates through bridging software, provided the records are digitally linked rather than copied and pasted between systems.
An illustrative example. The person in the brief has £16,000 of self-employed turnover and £8,000 of rent: £24,000 of qualifying income. That is below £30,000, so April 2027 does not apply. If 2026 to 2027 turnover is also over £20,000, the April 2028 start does. Volunteering from 6 April 2027 gives a full year of the routine before it is compulsory, without penalties for late quarterly updates.
What the board weighed
A practice year is worth more than a practice quarter. Future You's dissent argued for signing up now. The board agreed that practice is valuable, but signing up in October means catching up on the quarterly updates already passed, on records that were not kept digitally. Starting at the beginning of a tax year gives the cleanest test.
The penalty switch is one-way. The Devil's Advocate made the strongest point against volunteering: you move onto the new late-return penalty points and cannot move back. For someone who always files on time, that changes little. For someone who has filed late before, it is a reason to fix that habit first. The board recorded it as the main cost of joining early.
Software is the real first step. The decision that matters most is not when to sign up but getting records into a system that works for both income sources. That can start now with no sign-up at all.
Opting out keeps it a two-way door. Volunteers can opt out through their HMRC online account, which makes signing up early a reversible decision in most respects, apart from the penalty regime.
When the answer flips
If your qualifying income will stay at or below £20,000, the timeline HMRC has published does not yet require you to join, and volunteering is purely optional practice.
If you are already over £30,000 on your 2025 to 2026 return, you must start from 6 April 2027 anyway, and the question becomes how to prepare, not whether to volunteer.
If your records are already in suitable software, signing up sooner costs little, and the catch-up work for a part-year may be small.
If you have a history of late returns, fix that first: the new penalty points apply to volunteers from the day they join.
Common mistakes
- ›Measuring profit instead of turnover. The thresholds are based on income before expenses.
- ›Forgetting to add property income. Rent and self-employment turnover are combined.
- ›Signing up mid-year without digital records. You will have to send the missed quarterly updates.
- ›Assuming you can return to the old penalties. Once agreed, the new late-return penalties stay.
- ›Thinking it changes your tax bill. It changes reporting, not the amount or the payment dates.
Deciding when to join Making Tax Digital? Put your income, records and timeline through the boardroom and get a brief like this one.
Run this decision in CernoSources
- ›Check if you're eligible for Making Tax Digital for Income Tax (GOV.UK)
- ›Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK)
- ›Sign up for Making Tax Digital for Income Tax (GOV.UK)
- ›Use Making Tax Digital for Income Tax: send quarterly updates (GOV.UK)
- ›Use Making Tax Digital for Income Tax: submit your tax return (GOV.UK)
- ›Use Making Tax Digital for Income Tax: create digital records (GOV.UK)
- ›Use Making Tax Digital for Income Tax: if your circumstances change (GOV.UK)
- ›Penalties for Making Tax Digital for Income Tax (GOV.UK)
- ›Penalties for Making Tax Digital for Income Tax volunteers (GOV.UK)
Figures checked on 7 October 2026.
Frequently asked
When do I have to use Making Tax Digital for Income Tax?
It depends on your qualifying income. Over £50,000 on your 2024 to 2025 return meant starting from 6 April 2026. Over £30,000 on your 2025 to 2026 return means starting from 6 April 2027. Over £20,000 on your 2026 to 2027 return means starting from 6 April 2028.
What counts as qualifying income?
Your total income from self-employment and property before expenses, in other words turnover. Employment income, your share of partnership profits, dividends and pensions do not count. A landlord who is also a sole trader adds both turnovers together.
Do volunteers get penalties for late quarterly updates?
No. While you are volunteering, HMRC says you will not get penalties for missing quarterly update deadlines. You do move onto the points-based penalties for late tax returns, with a threshold of 2 points and a £200 penalty, and you cannot go back to the old penalties even if you stop volunteering.
Can I stop if I sign up voluntarily and don't like it?
Volunteers can opt out through their HMRC online services account. If you opt out, you no longer need to keep digital records or send quarterly updates, updates already sent for that tax year are deleted, and you send a normal Self Assessment return for the year.
Does Making Tax Digital change when I pay tax?
No. HMRC says it does not change the way you pay tax or the dates payments are due. You still submit a tax return, through your software, by 31 January after the end of the tax year.
Cerno is a decision-support aid, not legal, financial or medical advice. Where a decision turns on specialist ground, seek a qualified professional.