Do you need to use MTD?
The requirement is based on your qualifying income from the previous tax year. For most sole trader couriers, this is your total turnover before any expenses.
If your qualifying income was more than 50,000 pounds in 2024-25, you must use MTD ITSA for the 2026-27 tax year. If it was more than 30,000 pounds in 2025-26, the rule starts from 6 April 2027. If it was more than 20,000 pounds in 2026-27, it starts from 6 April 2028.
Exactly 50,000, 30,000 or 20,000 pounds is not over the threshold. If your income is 20,000 pounds or less, you are automatically exempt permanently.
Employment income through PAYE, dividends, pensions and one-off land transactions do not count towards this threshold. If you are in a partnership, MTD ITSA does not apply yet as no date has been published.
What counts as qualifying income
Qualifying income is your total income from self-employment before you deduct any expenses. For a courier, this means the gross amount you invoiced or received for deliveries, not your profit.
If you have other self-employment income or property income, you add these together before testing the threshold. For example, if you do courier work and let out a property, you combine both turnovers.
This figure is taken from the tax return you submitted for the previous year. If you are new to self-employment, you will not be required to use MTD until you have filed a return showing income above the threshold.
Mileage and vehicle costs
As a courier, your vehicle is likely your biggest expense. Under cash basis accounting, which is the default from 2024-25, you record expenses when you pay the bill, not when you incur it.
You must keep digital records of all vehicle costs, including fuel, insurance, maintenance and lease payments. If you claim mileage rates instead of actual costs, you still need to keep a digital log of the miles driven for business.
These records must be stored in compatible software. You cannot keep them only on paper or in a spreadsheet that is not linked to your MTD software. HMRC receives the total category amounts, not the individual receipts, but you must keep the underlying digital records for at least 5 years.
Quarterly updates and deadlines
You must send four quarterly updates each year. These are summaries of your income and expenses by category, cumulative from 6 April. They are not tax returns.
You must send an update even if you had no income or expenses in that period. You can send updates more often if you wish, but each must cover the full period.
The deadlines are fixed. If you miss a deadline, you may incur penalty points. For the 2026-27 tax year, there are no penalty points for missing a quarterly update deadline, but you must still send the update. Points still apply to the tax return deadline.
| Period ends | Deadline |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
Digital records and links
All income and expense records must be created and stored digitally in compatible software. Once a record has been sent to HMRC in a quarterly update, it must not be moved by hand. This means no rewriting it in another cell or copying and pasting between products.
If you use more than one piece of software, the records must be digitally linked. For example, you might use one app for invoicing and another for expenses. The data must transfer automatically or via a linked file, such as a CSV or XML import.
Keep your digital records for at least 5 years after the 31 January submission deadline for the tax year. This is the same retention period as Self Assessment.
Signing up
You must be registered for Self Assessment and have submitted a tax return in the last 2 years. You sign up for each income source separately if you have more than one.
From September 2026, HMRC will sign up anyone who needs it for 2026-27 and has not signed themselves up. This happens in stages using information HMRC already holds. You will receive confirmation in your HMRC online services or by post.
If your courier business ceased before 6 April 2026, you do not need MTD ITSA but must still file the 2025-26 tax return. If it ceased on or after 6 April 2026, you still need MTD ITSA and must send a quarterly update covering the period up to the date it stopped.
Penalties for late submissions
For tax years after 2026-27, missing a quarterly update deadline results in one penalty point. If you reach 4 points, you get a 200 pound penalty, plus 200 pounds for each further missed deadline.
Below the threshold, each point is removed automatically 24 months after the missed deadline. At the threshold, points are not removed automatically until you have 12 months of on-time updates and returns, plus sending any outstanding updates for the previous 24 months.
Late payment penalties are separate. If you pay your tax late, you may face a penalty of 3% at day 15 and 3% at day 30, plus a 10% annual interest rate from day 31. This applies to the tax owed, not the quarterly updates themselves.