MTD for Income Tax changes how you report to HMRC. Instead of one large tax return each year, you keep digital records and send updates as you go. It can feel like a lot at first, but Sage does much of the work for you. View the whole tax year below, so you always know what comes next.

Your year at a glance

MTD for Income Tax year has a clear shape. You keep your records up to date, send four quarterly updates, then send one year-end tax return.

Here are the dates for the 2026/27 tax year:

Your year-end tax return for 2026/27 is due by 31 January 2028.

Set up once

You do these steps once, near the start of your Making Tax Digital year:

1. Connect your bank account so your transactions import into Sage. See Connect a bank feed.
2. Set up Making Tax Digital for Income Tax to link Sage with HMRC. See Set up Making Tax Digital for Income Tax.

If you're brand new to Sage Sole Trader, start with Getting started with Sage Sole Trader.

Your regular routine

Between updates, keep your records up to date. This is the most important habit. Categorise your transactions as they come in, so each one is in the right place. You can do this yourself, or turn on auto-categorisation and check Sage's suggestions. See Choosing the right tax category for your transactions.

The more accurate your records, the easier each quarterly update is.

Your quarterly updates

Four times a year, you send a quarterly update to HMRC. Think of it as a progress report, not a tax return.

What gets sent

A quarterly update sends your year-to-date business income and business expenses. Sage takes these figures from your Completed transactions.

What doesn’t get sent

Quarterly updates don’t include:

• Savings interest
• Pension income
• Dividend income
• Employment income from PAYE
• Mileage and other simplified expenses adjustments

These are part of your year-end tax return instead. For mileage, keep a log through the year and claim it at year-end. See Record mileage.

Before you submit

Before each update, check that you:

• Categorise all transactions for the period, with nothing left in Draft
• Record any cash income
• Record any business costs you paid from a personal account
• Categorise personal transactions as non-business
• Check your income total against your invoices

How to submit

When you're ready, submit your update from your Income Tax area in Sage. For the steps, see Submit Income Tax quarterly updates.

After you submit

HMRC sends back an updated tax estimate. It shows an estimate of what you owe so far, which helps you plan. See View your Income Tax summary and How your Income Tax estimate works.

You can’t un-submit an update. If you spot a mistake, fix it in your records. Your next update sends fresh year-to-date totals that replace the earlier figures.

A worked example

You're a sole trader. In Quarter one, you earned £18,500 and had £4,200 of business expenses. Your quarterly update sends those two totals to HMRC.

You also received £150 of bank interest. Bank interest is personal income, so it doesn’t go in your quarterly update. It’s part of your year-end tax return instead.

Later, you realise you forgot a £300 cash payment from a customer. You record it now. Sage includes it in your Quarter two update, which sends new year-to-date totals.

What Sage does and what you do

Sage does much the work for you. You stay in control of your records.

Your year-end tax return

After the tax year ends, you send one year-end tax return. This replaces the old Self Assessment tax return.

Your year-end tax return brings everything together:

• The income and expenses from your quarterly updates
• Other income, such as savings interest, pensions, and dividends
• Any adjustments, such as your mileage allowance
• Any reliefs or allowances you can claim

HMRC then works out your final tax and National Insurance. You check the figures and confirm them. For the steps, see End-of-year Income Tax return.

Your year-end tax return for 2026/27 is due by 31 January 2028. Your tax payment dates don’t change. You still pay any tax you owe by 31 January.

If something goes wrong

Mistakes are normal, and most are easy to fix:

• Forgot a transaction? Record it now, and your next update includes it
• Categorised something wrong? Edit it before you submit
• Not sure about a figure? Check it against your bank statement or invoice
• Stuck on a tax rule? Speak to your accountant or check GOV.UK

If you need help with Sage, we're here for you. Join a webinar or get in touch.

• Getting started with Sage Sole Trader
• Submit Income Tax quarterly updates
• Key dates for Making Tax Digital for Income Tax
• Quarterly updates vs end of year tax return - FAQ
• End-of-year Income Tax return