HMRC Making Tax Digital for Income Tax July changes

HMRC’s fifth Making Tax Digital for Income Tax software developer newsletter, published on 29 July 2026, arrives at a tense moment. The service is already live for some sole traders and landlords, and for most people now in scope the first quarterly update deadline is 7 August 2026. So while the source document is written for software teams, the bigger story is about whether the tax system is becoming easier to use in practice. (gov.uk) If you read HMRC updates for a living, this one is a reminder that technical notes are often really public-service notes in disguise. When an API changes, or when a sign-up rule is clarified, that can shape what a taxpayer sees on screen and whether an agent can finish a job without ringing support. (gov.uk)

In plain English, Making Tax Digital for Income Tax is HMRC’s new route for sole traders and landlords using Self Assessment. Qualifying income means turnover from self-employment and property before expenses, based on the previous year’s tax return. If that figure was more than £50,000 on a 2024 to 2025 return, the start date was 6 April 2026. The next stages are more than £30,000 from 6 April 2027 and more than £20,000 from 6 April 2028. (gov.uk) **What this means for you:** the annual tax return and the 31 January payment deadline still stay in place. What changes is the method. You need compatible software, you need digital records of self-employment and property income, and you need quarterly updates every three months before you finalise the year through software. HMRC says software should be chosen before sign-up, and it does not provide the software itself. (gov.uk)

The July newsletter asks developers to look ahead rather than scramble later. HMRC says its standard pattern is deprecation followed by a six-month period before retirement, and this edition flags two retirements on 16 October 2026: Individuals Capital Gains Income API v2 and Individuals Reliefs API v2. It also says the Self Assessment Individual Details API can now return a 403 error, Client_Not_MTD_Enrolled, when a user is not actually signed up to MTD. (gov.uk) There is a practical lesson here for anyone building or testing tax software. Customers are put on standard reporting when they sign up, and only need to make a reporting election if they want calendar reporting. HMRC also says some open-obligation problems came from submissions that did not cover the full quarterly period, so software checks around date ranges and obligation status matter more than they may first appear. (gov.uk)

HMRC has also refreshed the public guidance around the service. The latest updates cover how Self Assessment amendments can affect qualifying income, what happens when a relevant income source stops, what to do about refunds, and what happens if someone signs up for the wrong tax year. Sign-up guidance now makes clear that volunteers can join for the current tax year or the next one. (gov.uk) That may sound minor, but it tells us where confusion is gathering. **What it means in ordinary terms:** people are not just asking how to file; they are asking whether they belong in the system, what counts as qualifying income, and what to do when their circumstances change. HMRC itself warns developers to expect queries on those points, which is a strong hint that support pages and onboarding language need as much attention as the code. (gov.uk)

The next burst of contact will come through deadlines and letters. HMRC says customers who miss the first quarterly update deadline on 7 August 2026 will start receiving reminder letters from October 2026, and some people who use digital communications may also see reminder messages in their online account. It also plans messages inside the Self Assessment service, and awareness letters from autumn 2026 into early 2027, for people with qualifying income over £30,000 who will be brought into MTD next. (gov.uk) The penalty picture needs careful reading. HMRC says people who had to join from 6 April 2026 will not get penalty points for late quarterly updates in the first tax year, but penalties can still apply for late tax returns or late payment. It has also enhanced customer and agent helplines with clearer recorded messages, better signposting and SMS links to support guidance. In other words, this is not a soft launch, but HMRC knows many people still need extra support through the first cycle. (gov.uk)

So what should you do now? If you are a taxpayer or agent, start with the basics: work out whether you are in scope, choose compatible software before sign-up, and make sure your digital records are complete. HMRC says digital records should capture the amount, the date and the category for income or expenses, and that software can be used to send quarterly updates and later submit the tax return. (gov.uk) If you are on the software side, the job is broader than shipping a feature. Review the October API retirements, test the new enrolment error, check how your product handles full-quarter obligations and reporting elections, and brief support teams for a rise in eligibility and deadline questions. HMRC says the next technical forum is on 8 September 2026 and the next newsletter is planned for 28 August 2026. That suggests the service is now in its most revealing phase: not the policy announcement, but the everyday test of whether people can actually use it. (gov.uk)