Making Tax Digital for VAT has applied to every VAT-registered business since 2022. Making Tax Digital for Income Tax is the same idea applied to Self Assessment, and it is no longer a future date: the first wave started on 6 April 2026. If you are a sole trader or a landlord, or you keep the books for one, three things changed at once. Records of income and expenses now have to be created and stored digitally, in software built for HMRC's service. Those records feed a quarterly update. And, for quarterly updates from the second year, missing a deadline earns a penalty point. Here is what each of those means for the invoices and receipts that cross your desk.
Who it applies to, and when
The trigger is qualifying income: your total income from self-employment and property before expenses, in other words turnover, as shown on an earlier tax return. The guidance on gov.uk sets it out as three waves:
- over £50,000 in the 2024 to 2025 tax year: you should have started from 6 April 2026;
- over £30,000 in the 2025 to 2026 tax year: you start from 6 April 2027;
- over £20,000 in the 2026 to 2027 tax year: you start from 6 April 2028.
Below £20,000 there is no mandate yet. If you are close to a threshold, the year that decides it is the one on the return you have already filed, not the year you are in now.
What a digital record has to contain
The guidance on gov.uk is short on this, and worth quoting because so much marketing copy pads it out. A digital record is a record of your income or expense that is created and stored using software built for Making Tax Digital for Income Tax. When you create one, "you will need to record the: amount, date when the income was received or expenses incurred, category". The category is the type of income or expense, and "the type of category you will use depends on the type of business you have".
That is the whole list: amount, date, category. There is a retail easement for cash sales (a single daily gross-takings record instead of one per sale), but for purchases the rule is one record per transaction. And the guidance is explicit that digital records do not replace the paperwork behind them: "you still need to keep original records or supporting documents (or copies of them) that you have used to prepare your tax return, such as bank statements and invoices".
Why the invoice is the evidence behind the record
Read those two sentences together and the shape of the obligation is clear. The digital record says £240 on 14 May, motor expenses. The invoice is what proves the £240 and the 14 May, and, if you are VAT registered, what proves the £40 of VAT inside it and the supplier who charged it. If the record and the document disagree, the document wins, because the record was supposed to be made from it.
So the quality of the record is set at the moment the invoice is read. An extraction that drops the date, mangles the net figure or loses the VAT line does not produce a slightly worse bookkeeping entry. It produces a digital record that the supporting document does not support. That was already true under MTD for VAT (the earlier piece on what "digital" means covers the VAT side); Income Tax extends it to every sole trader and landlord in scope, whether or not they are registered for VAT.
What "digital links" mean for a bookkeeper
Most people in scope will use more than one piece of software: something that captures and checks documents, something that keeps the ledger and talks to HMRC, possibly a spreadsheet in between. The Income Tax guidance allows that, with one condition: "if you use more than one product, you will need to digitally link your records in your software". And once a record has gone into a quarterly update, "you must not manually move the record within your record-keeping software or to other software".
In practice that means the hand-off between products has to be something one program wrote and another read, not something a person retyped. The VAT rules, which have run for longer, are the reference for what counts: an import file produced by one product and loaded by another is a digital link; retyping or routinely copying and pasting figures is not. For a bookkeeper the question to ask of every tool in the chain is does the next system import what this one produces, in the next system's own format?
The quarterly update
Each quarter, HMRC receives from the software that holds your records totals for each income and expense category for the tax year so far. The guidance is clear about what does not travel: "HMRC will not receive details of individual digital records, such as a receipt or invoice." The updates are summaries, not tax returns, and the deadlines are 7 August, 7 November, 7 February and 7 May. The year-end return still follows, by 31 January as before.
This is why the category matters so much. It is the one element of the record that HMRC actually sees each quarter, and it is set in your ledger, against your own chart of accounts, not read off the invoice. Two businesses can post the same invoice to two different categories and both be right.
Penalty points, in plain terms
Late submission under Making Tax Digital works on points, not fixed fines. "For each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss, you'll get a penalty point." One point per deadline, however late. "The penalty point threshold is 4 points. If you reach this, you'll get a £200 penalty", and a further £200 for each deadline missed after that. Points below the threshold drop off 24 months after the deadline they relate to.
Two things soften the first year. "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year", although every update still has to go in before the tax return can. And points are only ever about lateness: an update that is on time but built on a wrong record attracts no point, which is the same as saying the points regime does nothing to check your records. That part is on you.
Where NoticeDesk sits in this
NoticeDesk is the document end of the chain, not the HMRC end. It reads the invoice or receipt field by field, flagging any field it is unsure of, and stores the parts a digital record is made from as typed data: the invoice date, the net, VAT and gross amounts with their currency, and the supplier's VAT registration number. It runs the compliance checks on every document, looks the supplier's VAT number up against the official register (VIES for EU numbers, HMRC's own service for GB; a lookup that can't be completed is recorded as unverified, never assumed), and keeps the verdict, every edit and every export on the document's timeline. That is the evidence behind the record, kept in the shape an inspection asks for.
The record itself lives in your ledger. The exports are the digital link into it: files built to your accounts package's own import specification, and a full CSV for anything else. When you export, you choose the nominal or account code, and that choice is the category. NoticeDesk deliberately does not guess a category from the document, because the category belongs to your chart of accounts, not to the invoice. And NoticeDesk does not file, submit or send anything to HMRC: the quarterly update goes from the software that holds your records. HMRC does not recommend any product; it publishes a finder for software that has been through its recognition process, and that is where the filing half of your chain should come from.
Put plainly: if MTD for Income Tax has reached you, or reaches you in April 2027 or 2028, the invoice is no longer a receipt you keep in case. It is the evidence your quarterly figures rest on, and the point to check it is before it becomes a record.