Do the thresholds apply to mobile beauty work?
Qualifying income is the total income from self-employment and property before expenses - your turnover - taken from the tax return you submitted in the previous tax year. Add self-employment income and property income together before testing the threshold.
The threshold is tested as more than the figure, so exactly 50,000 pounds, 30,000 pounds or 20,000 pounds is not over it. Qualifying income of 20,000 pounds or less is an automatic permanent exemption.
| Tax year tested | Qualifying income over | MTD for Income Tax starts |
|---|---|---|
| 2024-25 | 50,000 pounds | 6 April 2026 |
| 2025-26 | 30,000 pounds | 6 April 2027 |
| 2026-27 | 20,000 pounds | 6 April 2028 |
Not counted towards the threshold: employment income through PAYE, a partnership share as an individual partner, dividends, State and private pensions, qualifying care relief, basis period reform transition profits, and one-off transactions in UK land in a single tax year. All UK properties are treated as one UK property business. Partnerships are not in scope yet, with no date published.
Travel, stock and cash takings
Cash basis is the default method of accounting from 2024-25. Under cash basis, income and expenses are recorded when money is received or a bill is paid. If you would rather use traditional accounting, you opt out.
Cash takings work the same as any other payment: each amount received is income, and it needs a record in compatible software rather than a note in a diary. A digital record is a record of income or an expense that is created and stored in compatible software.
Travel to appointments and the products or stock you buy for treatments are expenses. They sit in the same income and expense categories as Self Assessment, and HMRC receives the category totals in each update, not the individual transactions.
Keep business records for income and expenses for at least 5 years after the 31 January submission deadline for the tax year, the same period as Self Assessment.
What each quarterly update contains
A quarterly update is a set of totals by income and expense category, cumulative from 6 April. It is a summary, not a tax return.
- Totals by income category and by expense category, using the same categories as Self Assessment.
- Figures cumulative from 6 April to the end of the update period.
- A summary sent to HMRC - HMRC receives the category totals, not the individual transactions.
- An update for every period, including one with no income and no expenses.
You can send an update from the end of the period up to the deadline, or up to 10 days before the period ends if you expect no further transactions. Updates can be sent more often than quarterly, but each must cover the full update period. After each update you can see an estimate of your tax bill in your software or in HMRC online services.
Quarterly update deadlines
| Update period ends | Deadline to send |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
Two update period types are available. Standard periods are aligned to the tax year, from 6 April to 5 April. Calendar periods run 1 April to 31 March, ending the last day of the month. The deadlines are the same for both, and the accounting period cannot be changed after the first quarterly update has been sent.
Records and digital links
Once a record has been sent to HMRC in a quarterly update it must not be moved by hand, either within the software or between products. That means no writing it out in another cell or another product, and no cut and paste or copy and paste.
- Linked cells in spreadsheets, where a formula mirrors the source value.
- Emailing a spreadsheet containing digital records so it can be imported.
- Transferring records on a portable device such as a memory stick for someone to import.
- XML and CSV import and export, and downloading and uploading files.
- An automated transfer using an API.
If you use more than one product, only one product can be used for each separate submission, and the records must be digitally linked between them. Other income such as a partnership share, dividends, savings interest or pensions can be kept digitally but does not have to be.
Penalties in the first year
For 2026-27 there are no penalty points for missing a quarterly update deadline. Points still apply to the tax return deadline, and digital records and quarterly updates are still required.
From tax years after 2026-27, a missed submission deadline brings one penalty point each time, and only one point per deadline even with several businesses or several late updates. At 4 points there is a 200 pound penalty, then a further 200 pound penalty each time another submission deadline is missed.
Below the threshold, each point is removed automatically 24 months after the missed deadline. At the threshold, points are not removed automatically: it takes 12 months of on-time quarterly updates and tax returns, plus sending outstanding updates and returns for the previous 24 months. Penalty points for volunteers have a lower threshold, of 2 points.
Late payment penalties are not points based. They apply to each late payment, but not to payments on account. In 2026-27, a payment 16 to 30 days late is 3% of the tax owed at day 15, or no penalty in the first year. At 31 days or more it is 3% at day 15 and 3% at day 30, plus an annual rate of 10% charged daily from day 31, up to 2 years. From 2027-28 the same shape applies at 4% and 4%.
Late payment interest runs from the first day the payment is late until it is paid in full.
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 if you have more than one.
- Sign-up does not ask about other income sources or gains. Those are added in compatible software before the tax return is submitted.
- You can sign up for the current tax year or the next one before you are required to.
- You still submit the Self Assessment tax return for the tax year before you start using MTD for Income Tax.
- From September 2026 HMRC signs up anyone who needs it for 2026-27 and has not signed themselves up, in stages, using only the information HMRC already holds.
Confirmation of sign-up arrives in HMRC online services or by post, and an identification check may be required. If all income ceased before 6 April 2026 you update your details and do not need MTD for Income Tax, but you still file the 2025-26 tax return. If it ceased on or after 6 April 2026 you still need MTD for Income Tax and must send a quarterly update covering the period up to the date it stopped.
What the software has to do
HMRC does not provide software, and does not approve, endorse or recommend any product. For MTD for Income Tax, compatible software must create and store digital records, work with your chosen accounting period and send the quarterly updates. An all-in-one product also submits the tax return.
HMRC's find software service lists products that meet the requirements for the service. It does not rank them and does not carry prices.
You authorise the software so it connects to HMRC, and repeat that every 18 months without repeating the identity check. Software defaults to an accounting period aligned to the tax year, so if your accounting period runs 1 April to 31 March you select calendar periods before the first update.