If you were waiting for big Making Tax Digital news in Budget 2026, it was in the small print. The Budget documents, published on 28 October, contain two MTD announcements:
- people joining MTD in April 2027 will get a first year without penalty points for late quarterly updates;
- several groups will not have to join MTD at all, until further notice.
Neither is a delay, and neither moves the deadline current filers face on Saturday 7 November. Here is what each one means, and who it helps.
A first-year pass for the second wave
The first wave of MTD, 864,000 people with qualifying income over £50,000 by HMRC’s count, was due to join in April 2026. They were promised a year without penalty points for late quarterly updates while they got used to the new routine.
The second wave is bigger. HMRC expects around 1,077,000 more sole traders and landlords, with qualifying income between £30,000 and £50,000, to join in April 2027. Until now, they were due to face penalty points from their very first update.
The Budget changes that. The government says it will not apply late submission penalty points to quarterly updates in 2027-28 for people required to join in April 2027. The Association of Tax Technicians, which asked for the extension, had argued this group is less likely than the first to have an agent or already use software.
Who counts as an April 2027 joiner? Anyone required to start then. The ATT’s reading is that this goes beyond the £30,000 threshold, to people whose temporary exemption ends in April 2027 and people who started a new trade or letting business in 2025-26. Expect HMRC to confirm the detail.
The catch
A year without penalty points is not a year off. Quarterly updates are still required, and the Budget says they must be sent before the tax return can be submitted. Because updates are cumulative from 6 April, in practice that means at least the final update, covering the whole year, has to be in before the return. The pass covers late quarterly updates only: a late tax return can still earn points.
And there is no second pass for this year’s joiners. If you started in April 2026, the existing rules apply from 2027-28: each late quarterly update earns a point, and at 4 points HMRC charges a £200 penalty.
Who is out of MTD for now
The Budget lists three groups the government will exempt from MTD for Income Tax until further notice, with legislation due before April 2027:
- people eligible for qualifying care relief, such as foster carers;
- non-UK resident foreign entertainers and sportspeople;
- people expected to be non-UK resident.
The first two already had temporary exemptions running to April 2027, so for them this mostly turns a stopgap into something open-ended. For people expecting to become non-resident, the ATT understands you will need to tell HMRC about the change in your circumstances. The ATT also understands a fourth group will be deferred: people who became insolvent before signing up and are still trading. That one is not in the Budget documents yet.
HMRC has not published the detail, so if you are in one of these groups, check GOV.UK before you sign up or stop preparing.
Landlords: a bigger bill from 2027-28
Away from MTD, landlords face another rise. Last year’s Budget set property income tax 2 points above the usual rates from April 2027, and this one adds 2 more. From 6 April 2027 property income will be taxed at 24% at the basic rate, 44% at the higher rate and 49% at the additional rate in England, Wales and Northern Ireland, with legislation planned in Finance Bill 2026-27. The Scottish and Welsh governments can set their own property income rates, and which rates apply depends on where you live, not where the property is.
Your quarterly updates do not change: you still send rent and expenses, and HMRC works out the tax. It is the bill that changes, so revisit how much you set aside.
Payments on account: smaller and more often, from 2029
From April 2029, people who already make payments on account will pay smaller amounts more regularly through the year. The government says the payments will be automated and that you will be able to choose to pay through PAYE. The details are still to come, so do not change how you pay yet.
Meanwhile, 7 November hasn’t moved
For anyone already in MTD, the most pressing date is the same as it was last week. The second quarterly update is due on Saturday 7 November 2026 and, because updates are cumulative, it covers everything from 6 April to 5 October. On calendar update periods it runs to 30 September instead: from 6 April in your first year on calendar periods, or from 1 April if you were already using them in 2025-26.
Missed the August update? You do not need to send it on its own, because this one covers it. Our missed-update guide explains how.
What next?
For more than a million people starting next April, the Budget takes some of the sting out of year one. For everyone else it changes little: there is no wider delay or review, and the third quarter and the Self Assessment season are close behind 7 November.
- Already filing: send your update to 5 October by 7 November.
- Starting April 2027: confirm your start date with the MTD start date checker and set up your records now. The pass forgives late updates, not missing ones.
- Possibly exempt: watch for HMRC’s detail before you sign up.
- Landlords: factor the 2027-28 rates into what you set aside.
- Practices: sort clients into current filers, April 2027 joiners, the possibly exempt and landlords, and tell the April 2027 group exactly what their pass does and does not cover.
With aligned.tax your spreadsheet can stay. Upload your XLSX workbook, check how it maps to HMRC’s categories and the figures, then send your quarterly update. Using Google Sheets, Numbers or another format? Save or export it as XLSX first. Sending your own quarterly updates is free for individuals; see pricing for practices.
See how quarterly filing works
Frequently asked questions
Does Budget 2026 change the 7 November MTD deadline?
No. If you already file under Making Tax Digital for Income Tax, your quarterly update covering 6 April to 5 October 2026 is still due on Saturday 7 November 2026. On calendar update periods it runs to 30 September instead.
Will I get penalty points for a late quarterly update in 2027-28?
It depends on when you joined. Budget 2026 says the government will not apply late submission penalty points to quarterly updates in 2027-28 for people required to join MTD in April 2027. If you joined in April 2026, the existing rules still apply, so late quarterly updates earn points from 2027-28.
Do I still need to send quarterly updates if there are no penalty points?
Yes. Budget 2026 says you will still need to send your quarterly updates before you can submit your tax return. The easement covers penalty points for late quarterly updates only, not late tax returns.
Who is now exempt from MTD for Income Tax?
Budget 2026 says the government will exempt, until further notice, people eligible for qualifying care relief, non-UK resident foreign entertainers and sportspeople, and people expected to be non-UK resident. Legislation is due before April 2027, and HMRC has not yet published the detail.
What are the new property income tax rates?
From 6 April 2027, 24% at the basic rate, 44% at the higher rate and 49% at the additional rate, in England, Wales and Northern Ireland. The government plans to legislate in Finance Bill 2026-27. The Scottish and Welsh governments can set their own property income rates.
Should I change my payments on account now?
No. The change to smaller, more regular payments starts in April 2029 and only applies to people who already make payments on account. The details are still to come.
Sources
- GOV.UK: Budget 2026 overview of tax legislation and rates (OOTLAR)
- GOV.UK: Budget 2026
- GOV.UK: Find out if you can get an exemption from Making Tax Digital for Income Tax
- GOV.UK: Making Tax Digital for Income Tax business population statistics
- GOV.UK: Penalties for Making Tax Digital for Income Tax
- AccountingWEB: Budget brings some MTD reprieves (Emma Rawson, ATT)