Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, and extends to those over £30,000 from April 2027 and over £20,000 from April 2028. HMRC now receives your business figures every quarter rather than once a year. Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry into your return, up to £100,000 with Solar Protect and with no excess.
Tax investigation insurance from £108.75 a year (£9.06 a month).Pays up to £100,000 of your accountant's fees if HMRC opens an enquiry. No excess. Buy online in a few minutes.
Who has to use Making Tax Digital for Income Tax?
GOV.UK sets out the timetable, based on qualifying income from self employment and property:
- over £50,000: from 6 April 2026, based on 2024 to 2025 income;
- over £30,000: from 6 April 2027, based on 2025 to 2026 income;
- over £20,000: from 6 April 2028, based on 2026 to 2027 income.
Our guide to Making Tax Digital for Income Tax explains the software, quarterly updates and the final declaration.
What penalties apply under Making Tax Digital?
Late submission penalties use a points system. HMRC’s guidance says the threshold for quarterly updates is 4 points, and reaching it means a £200 penalty, then £200 for each further missed deadline. There is one point per deadline, even if you have more than one business. For the 2026 to 2027 tax year HMRC has said “There are no penalties for missing a quarterly update deadline”, although the updates still have to be sent before you can file your return.
Worried about an HMRC check? Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry or compliance check. Solar Protect cover pays up to £100,000 with no excess. It never pays tax, interest or penalties.
From £108.75 a year (£9.06 a month) for individuals, £117.57 for sole traders and £207.50 for companies and partnerships, including IPT and the £20 admin fee.
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Does quarterly reporting make an HMRC enquiry more likely?
HMRC has not published anything that says so, and the enquiry rules have not changed: HMRC normally has 12 months from when you file your return on time to open an enquiry, and can make a discovery assessment later in some cases. What has changed is the amount of data HMRC holds. Quarterly figures, together with digital platform reports and other third party data, give HMRC more to compare. See what triggers an HMRC investigation.
What might HMRC ask about?
- differences between quarterly updates and the final return;
- how income and costs were categorised in your software;
- whether digital records support the figures;
- rental income and costs for landlords, including finance costs.
What does tax investigation insurance pay for?
It pays your accountant’s fees for dealing with an HMRC enquiry into your return, up to the policy limit. It does not pay tax, interest or penalties, including late submission penalties, and it will not cover a check that started before the policy. Read how our cover works or get a quote today. See also cover for sole traders and for landlords.
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 7 October 2026. This guide is general information, not personalised tax advice. Cover is subject to the policy terms, conditions and exclusions.