If you’ve worked out that Making Tax Digital applies to you, the next question is practical: how do you actually file? The process isn’t complicated, but the steps have to happen in the right order — you can’t register before you’ve chosen software, and you can’t submit quarterly updates before you’ve registered and authorised your software with HMRC.
This guide walks through the complete filing process from start to finish. Each step gives you the essentials, then links to a detailed guide for the deep dive. If you want the conceptual overview of what MTD is and why it exists, start with our Making Tax Digital guide instead — this page is for when you’re ready to actually do it.
Step 1: Check whether you need to file
MTD for Income Tax applies if your qualifying income — self-employment turnover plus UK property income, gross before expenses — exceeds the MTD eligibility threshold for your phase. PAYE, pensions, dividends, and savings interest don’t count. The thresholds phase in over three years: over £50,000 from April 2026, over £30,000 from April 2027, and over £20,000 from April 2028. If your qualifying income is £20,000 or below, you’re automatically exempt.
To check exactly what counts as qualifying income and which phase you fall into, see our MTD qualifying income thresholds guide. For the full list of exemptions (certain roles, age, disability, religious belief, and location), see our MTD exemptions guide.
Step 2: Choose your MTD software
You cannot file MTD through HMRC’s website — you must use HMRC-compatible software that submits quarterly updates and your final declaration via API. The good news: free options exist. FreeAgent is free with certain business bank accounts, Sage has a free sole trader tier, and Acxite bridges your existing spreadsheet to HMRC for free. Paid options typically cost £10–£30/month.
For the full comparison of every free and low-cost option, see our cheapest MTD software for sole traders guide. If you want to keep using a spreadsheet, see our spreadsheets for MTD guide — you can, but you need bridging software to submit to HMRC. And yes, the cost of MTD software is an allowable expense you can deduct from your taxable income.
Step 3: Register for MTD with HMRC
Once you’ve chosen software, you must formally register for MTD through HMRC’s online sign-up service using your Self Assessment Government Gateway login. You’ll need your business details (start date, name, address, nature of trade), proof of identity, and the tax year you want to start. After signing up, you authorise your software to connect to your HMRC tax account — this is what allows it to submit updates on your behalf.
For the full step-by-step registration process (all 10 steps, including what to do if HMRC can’t verify your identity), see our how to register for MTD guide. If you’re not yet registered for Self Assessment — a prerequisite — see our first-year self-employed checklist.
Step 4: Get your records digital and ready
MTD requires digital records: for each transaction, you need the date, the amount, and whether it’s income or an expense. If your turnover from an income source is under £90,000, you can use simplified reporting (three-line accounts) — just total income and total expenses, no category breakdown. Over £90,000, you need to categorise expenses by type. Move at least one full tax year of records into your software before your first quarterly update so you have a clean starting position.
For the complete preparation checklist (records, software setup, bank feeds, expense categories, practice updates), see our MTD readiness checklist. If you have multiple trades or income sources, see our MTD with multiple trades guide — you send separate quarterly updates for each separate trade.
Step 5: Submit your quarterly updates
Once registered and authorised, your software generates quarterly updates from your digital records. You review the income and expense totals, click submit, and the software sends the update to HMRC via API. No tax is due at this stage — the updates are informational summaries. The deadlines for tax-year quarters are 7 August, 7 November, 7 February, and 7 May. If you had no income in a quarter, you still send an update showing £0 income and any expenses incurred.
For the full guide to quarterly updates — deadlines, what each update contains, how to submit, the three-line accounts simplification, and what records you need — see our MTD quarterly updates guide.
Step 6: Submit your final declaration
After your four quarterly updates, you submit a final declaration by 31 January after the tax year ends. This replaces the annual Self Assessment return. It’s where you add adjustments that weren’t in your quarterly updates — capital allowances, pension contributions, Gift Aid, losses brought forward, and any corrections to earlier quarters. Your software calculates your final tax position and submits the declaration to HMRC.
For what changes and what stays the same compared to the old Self Assessment return, see our MTD vs Self Assessment guide. For the plain-English explainer of the whole MTD for Income Tax system, see our Making Tax Digital for income tax explained guide.
Step 7: Pay your tax
Your payment deadlines don’t change under MTD. Tax is still due by 31 January (balancing payment plus first Payment on Account) and 31 July (second Payment on Account). The reporting cycle (four deadlines) and the payment cycle (two deadlines) run in parallel and never merge — submitting a quarterly update does not trigger a payment. Your software may show an estimated tax bill after each update, but this is informational only.
For how Payments on Account work and how to adjust them if your profit is falling, see our payment on account explained guide. If you can’t pay by the deadline, see our HMRC payment plan (Time to Pay) guide.
What’s different in your first year (2026/27)
The first year of MTD has a penalty grace period: there are no penalty points for late quarterly updates in the 2026/27 tax year. You still need to submit all four quarterly updates before you can submit your final declaration, but missing a quarterly deadline won’t trigger a fine. Penalties for late final declarations and late payment still apply as normal.
From April 2027, the full points-based system kicks in: one point per missed quarterly update or final declaration deadline, and a £200 penalty when you reach four points. For the full penalty rules — including late payment penalties, the points expiry system, and how to appeal — see our MTD penalties guide.
If something goes wrong
The most common filing problem isn’t a tax issue — it’s a software-to-HMRC connection failure. If your software keeps failing to link to HMRC with errors like “save business failed”, the cause is almost always on the HMRC authorisation side: you haven’t signed up for MTD yet, you’re using the wrong Government Gateway credentials, or your National Insurance number doesn’t match HMRC’s records.
For the step-by-step fix, see our Starling Accounting MTD link failed guide — the troubleshooting steps apply to most software, not just Starling. If you’ve lost access to your Government Gateway account entirely, see our locked out of Government Gateway guide.
The bottom line
- The steps happen in order — check eligibility, choose software, register, get records in, file quarterly updates, file final declaration, pay. You can’t skip ahead.
- You file through software, not HMRC’s website — compatible software submits everything via API. Choose software before you register.
- Quarterly updates are reporting only — no tax is due when you submit them. Tax is still due 31 January and 31 July.
- The first year has a grace period — no penalties for late quarterly updates in 2026/27, but late final declarations and late payment always carry penalties.
- What you pay doesn’t change — MTD changes how you report, not how much tax you owe or when you pay it.
For the conceptual overview of what MTD is and why it exists, see our Making Tax Digital guide. For profession-specific guidance, see MTD by profession. For the full MTD vs Self Assessment comparison, see our MTD vs Self Assessment guide.