🔑 Key Rule
Since April 2026, self-employed drivers with gross income over £50,000 must keep digital records and submit quarterly updates to HMRC using compatible software, instead of filing just one return a year.
What Is Making Tax Digital for Income Tax (MTD ITSA)?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's move away from a single annual tax return towards continuous digital reporting. If you're within scope, instead of submitting one Self Assessment return after the end of the tax year, you now:
- Keep digital records of your business income and expenses throughout the year
- Submit a quarterly update to HMRC summarising income and expenses for that quarter
- Submit a final declaration after the tax year ends, confirming your total figures and any adjustments
Are You Affected? The Income Thresholds
| From | Gross Income Threshold |
|---|---|
| April 2026 | Over £50,000 |
| April 2027 | Over £30,000 |
| April 2028 | Over £20,000 |
The threshold is based on your gross self-employed and/or property income (before expenses) — not your profit. For drivers running multiple apps, this means your combined gross fares across all platforms count toward the threshold, as explained in our multi-app driver tax guide. If you're close to £50,000 in gross fares this year, you should plan for MTD now even if you're not yet mandated.
What Changes in Practice for Drivers
Quarterly Updates Instead of One Annual Return
Rather than gathering a year's worth of receipts and statements once a year, you'll need to total your income and expenses every quarter and submit a summary to HMRC. The standard quarters are aligned to the tax year (6 April–5 July, 6 July–5 October, 6 October–5 January, 6 January–5 April), with each update due roughly one month after the quarter ends. This is a significant change in rhythm — record-keeping that used to happen once a year now needs to happen at least every three months.
Compatible Software Requirements
Quarterly updates and the final declaration must be submitted using HMRC-recognised MTD software. This can be:
- Dedicated accounting software with MTD support built in
- A spreadsheet connected to bridging software that submits the figures to HMRC digitally
A spreadsheet on its own — emailed or printed — no longer satisfies the requirement once you're within scope. If you currently keep a simple mileage and expenses spreadsheet (see our record-keeping guide), the records themselves are still valuable — you'll just need to connect them to compatible software for submission.
How to Prepare: A Checklist for Taxi, PHV & Delivery Drivers
- Check your gross income against the £50,000 threshold for 2025/26 — remember this is gross fares across all platforms, not profit
- Choose MTD-compatible software — either full accounting software or bridging software for your existing spreadsheet
- Set a quarterly routine — block out time every three months to total income and expenses, rather than leaving everything to January
- Digitise your mileage log — a digital, contemporaneous mileage record makes quarterly totals much faster to produce
- Talk to your accountant — if you use one, ask whether they offer MTD-compliant software as part of their service, and how quarterly submissions will work going forward
Estimate Your Quarterly Tax Position Now
Use our free calculator to estimate your taxable profit and tax due based on your income and mileage so far this year — a useful check before each quarterly update.
Open Free Tax Calculator →Penalties for Late Quarterly Submissions Under the New Points System
⚠ New Penalty Points System
Late submissions under MTD use a points-based system rather than an immediate fine for each missed deadline. Each late quarterly update or final declaration adds a point; once you reach a points threshold (4 points for quarterly submitters), a fixed financial penalty is triggered. Points expire after a period of consistent on-time filing. This is a different approach to the immediate £100 late-filing penalty under the old annual Self Assessment system — see our deadlines and penalties guide for how the previous system worked and how the two compare.
Frequently Asked Questions
Who has to use Making Tax Digital for Income Tax?
From April 2026, self-employed drivers and landlords with gross income over £50,000 must use MTD ITSA. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
What is different under Making Tax Digital?
Instead of one annual Self Assessment return, you submit quarterly updates of your income and expenses using HMRC-recognised software, plus a final end-of-year declaration.
Can I still use a spreadsheet under MTD?
Only if it's connected to HMRC-recognised bridging software that submits your quarterly updates digitally. A standalone spreadsheet does not meet MTD requirements on its own.