Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is no longer a future deadline to plan for — it is here. From 6 April 2026, sole traders and self-employed individuals with gross income above £50,000 are legally required to maintain digital records and submit quarterly updates to HMRC. For GP partners, locum doctors, and self-employed healthcare professionals across England and Wales, this represents the most significant change to personal tax administration in a generation.
This guide explains exactly what MTD for Income Tax means for you, who is affected right now, what the quarterly submission cycle looks like in practice, and the steps you need to take immediately if you have not already made the switch. If you earn above the threshold and are still using spreadsheets, paper records, or an annual shoebox handover to your accountant, you are now operating outside the law.
What Is MTD for Income Tax and Why Does It Matter for Doctors?
Making Tax Digital for Income Tax Self Assessment is HMRC’s programme to replace the annual Self Assessment tax return with a system of real-time digital record-keeping and quarterly income and expense submissions throughout the year. The final annual declaration replaces the traditional SA100 return and must also be submitted through MTD-compatible software — HMRC’s own online filing portal is no longer available for taxpayers within the MTD regime.
For most employed NHS doctors whose income is entirely taxed through PAYE, MTD for Income Tax does not apply. The regime targets income that sits outside PAYE — and for doctors, that covers a significant range of activity.
MTD for Income Tax applies to doctors who have self-employment or property income from:
- GP partnership drawings and profit share
- Locum shifts paid gross (whether through agencies, directly from practices, or NHS trusts)
- Private consultations and outpatient sessions
- Medical report writing, expert witness work, and medicolegal income
- Income from a private limited company where additional self-employment income exists
- Rental income from property, if combined with self-employment income it takes the total above £50,000
Key Point: HMRC assesses your qualifying income based on your 2024/25 Self Assessment return — the one filed by 31 January 2026. If that return showed gross self-employment or property income above £50,000, you are in scope from 6 April 2026 regardless of whether you have received any formal notification from HMRC.
Who Is Affected Right Now: The Three Phases of MTD Rollout
MTD for Income Tax is being introduced in three phases based on income thresholds. Understanding which phase applies to you determines your deadline.
Phase 1 — From 6 April 2026 (now live) Sole traders and landlords with gross business or property income exceeding £50,000. For most GP partners earning profit share above this level, and for locum doctors with a busy panel of engagements, Phase 1 applies immediately.
Phase 2 — From 6 April 2027 The threshold drops to £30,000. This captures the majority of locum doctors, even those working part-time or combining locum income with salaried NHS work.
Phase 3 — From 6 April 2028 The threshold drops further to £20,000, bringing virtually every self-employed healthcare professional into scope.
Important — how HMRC determines your threshold:
HMRC uses your most recently filed Self Assessment return to determine whether you fall within scope. For Phase 1, that is your 2024/25 return filed by 31 January 2026. If your gross income in that return exceeded £50,000, you are required to comply from 6 April 2026. HMRC does not automatically notify all affected taxpayers — the obligation is yours to determine and act upon.
Note for GP Partners: Gross income for MTD threshold purposes is assessed before expenses. Your profit share after drawings may be significantly lower than your gross partnership income figure. Many GP partners with modest net profits are still within scope because their gross income share exceeds £50,000. Check your 2024/25 partnership pages carefully, or ask your GP practice accountant.
What Changes in Practice: Annual Return vs Quarterly Submissions
The shift from annual Self Assessment to MTD is more significant than simply changing software. It fundamentally alters the rhythm of tax administration throughout the year.
The old annual cycle:
- Keep records throughout the year (in whatever format you chose)
- Hand records to accountant after 5 April
- File Self Assessment return by 31 January the following year
- Pay tax by 31 January (and payments on account by 31 July)
The new MTD cycle:
There are now four quarterly submission windows each year, plus a final annual declaration. The quarterly periods and submission deadlines for the 2026/27 tax year are:
Quarter 1: 6 April – 5 July 2026 → Submit by 5 August 2026 Quarter 2: 6 July – 5 October 2026 → Submit by 5 November 2026 Quarter 3: 6 October – 5 January 2027 → Submit by 5 February 2027 Quarter 4: 6 January – 5 April 2027 → Submit by 5 May 2027 Final declaration: Submit by 31 January 2028 (replaces the SA100)
Each quarterly update reports your income and expenses for that period to HMRC using MTD-compatible software. The update does not trigger an immediate tax payment — it is a reporting obligation only. Tax is still calculated and paid annually, with payments on account continuing as before.
Good News for 2026/27: HMRC has confirmed a soft landing period for the first year of mandatory quarterly submissions. Penalty points will not be issued for late quarterly updates during 2026/27. However, late payment penalties and interest still apply, and the soft landing does not extend to 2027/28. Now is the time to build correct habits, not delay compliance.
What Records Must Be Kept Digitally?
Under MTD for Income Tax, the following must be maintained in digital form using MTD-compatible software — paper records, manual spreadsheets, and disconnected systems do not meet the requirements.
For GP partners:
- Partnership income received (monthly drawings and year-end profit allocation)
- Any additional self-employment income outside the partnership
- Business expenses incurred personally (GMC fees, BMA subscription, CPD costs, medical indemnity, mileage)
- Property income if applicable
For locum doctors:
- All gross locum income by engagement (date, payer, amount)
- Agency payments and direct NHS payments
- All allowable business expenses (travel and mileage, equipment, medical bag contents, professional subscriptions, home office costs where applicable)
- Invoices issued and payments received
What counts as a digital record:
The record must be held in software that connects to HMRC’s API — not just stored as a digital file. A scanned receipt saved in a folder is not a digital record for MTD purposes. The income and expense data must flow directly from your records into your quarterly submission through the software. This is why choosing the right bookkeeping software from the outset is critical.
Choosing the Right MTD-Compatible Software
HMRC maintains a list of approved MTD-compatible software. For most healthcare professionals, the practical choice comes down to three platforms — each with different strengths depending on your situation.
Xero — best for GP partners and locums with moderate complexity. Strong bank feed integration, good expense categorisation, and widely used by healthcare accountants. Xero can handle both the quarterly MTD submissions and the final declaration. Cost: from approximately £15–30 per month depending on plan.
QuickBooks Self-Employed or QuickBooks Online — suitable for locum doctors with straightforward income and expenses. The Self-Employed version is simpler but may not handle partnership income well. QuickBooks Online is more capable for those with mixed income sources.
Sage Accounting — a strong option for GP practices that already use Sage for their practice bookkeeping. Good MTD functionality and integrates well with payroll software used by practice managers.
Free Agent — well-suited to locum doctors operating as sole traders with simpler affairs. Includes MTD functionality and is available free with some business bank accounts (NatWest, Royal Bank of Scotland).
Important: Do not choose software based on cost alone. The software must support the complete MTD journey — quarterly updates AND the final annual declaration. Some cheaper tools support quarterly updates but cannot file the final declaration, which means you would need a second system at year-end. Your healthcare accountant should be able to confirm which software is appropriate for your specific income profile.
Step-by-Step: What You Need to Do Right Now
If you have not already set up for MTD for Income Tax, here is the action sequence to follow immediately.
Step 1 — Confirm whether you are in scope Check your 2024/25 Self Assessment return (the one filed by 31 January 2026). If your gross self-employment income plus property income exceeded £50,000, you are in Phase 1. If you are a GP partner, check your partnership pages for your gross income allocation, not just your profit share. If you are uncertain, contact your accountant for GP practices immediately.
Step 2 — Register for MTD for Income Tax with HMRC You must register for MTD ITSA through your HMRC online account or through your agent (accountant). Registration is separate from having a Self Assessment account — you cannot simply start filing quarterly without being registered. Your accountant can register you through their Agent Services Account, which is the most straightforward route if you already use a specialist healthcare accountant.
Step 3 — Choose and set up MTD-compatible software Select an approved platform and set it up with your correct business categories. Connect your business bank account to enable automatic transaction feeds. Ensure the software is linked to HMRC’s API — your accountant or the software provider can confirm this is correctly configured.
Step 4 — Categorise your opening transactions from 6 April 2026 Your digital records must begin from the first day of the tax year — 6 April 2026. If you have transactions from April that have not yet been recorded digitally, enter these now. Going forward, record income and expenses as they occur rather than in batches.
Step 5 — Plan your first quarterly submission (due 5 August 2026) Your first quarterly update covers 6 April to 5 July 2026. This is due by 5 August 2026. Set a reminder now and ensure your records are up to date by early July so your accountant has time to review before submission. Rushing a quarterly submission in the final days is unnecessary stress — good bookkeeping habits throughout the quarter make it straightforward.
Allowable Expenses for GP Partners and Locum Doctors Under MTD
One of the practical benefits of quarterly digital record-keeping is that it forces a regular review of expenses — which means more allowable deductions are captured throughout the year rather than forgotten by the time of the annual return.
GP partners can typically claim:
- GMC registration fee and annual retention fee
- Medical Defence Organisation (MDO) or medical indemnity premiums
- BMA membership and professional subscriptions
- CPD courses, conferences, and clinical training
- Medical journals and clinical reference resources
- Home office costs (proportion of utilities, broadband) where a room is used exclusively for administrative work
- Travel between practice sites or to patient homes (mileage at 45p per mile up to 10,000 miles, 25p thereafter)
- Locum fees paid personally (not through the practice) to cover your absences
Locum doctors can typically claim:
- Travel to and from engagements (mileage, public transport, parking)
- Accommodation for overnight locum stays away from home
- Medical bag, instruments, and portable diagnostic equipment
- Clinical software subscriptions
- GMC and MDO fees
- Professional indemnity insurance
- Proportion of phone and internet costs used for work
- Accountancy fees
Action Point: Under MTD, expenses must be recorded in HMRC’s prescribed categories — not simply lumped together. Your software will have pre-set expense categories aligned with HMRC’s requirements. Ensure your accountant sets up the category structure correctly from day one, as reclassifying a year’s worth of transactions later is time-consuming. Our personal tax team works with locum doctors and GP partners to ensure all allowable expenses are captured and categorised correctly under MTD.
MTD and GP Partnerships: The Additional Complexity
GP practices operating as partnerships have a layer of additional complexity that purely sole-trader locums do not face. The partnership itself files a partnership tax return, while each individual partner files their own Self Assessment (now MTD submission) for their personal income from the partnership and any other sources.
Under MTD, each GP partner with qualifying income above the threshold must maintain their own individual digital records and submit their own quarterly updates. The partnership return remains separate and is not yet brought within MTD (general partnerships are currently excluded from MTD mandation, though this may change post-2028).
This means a GP practice with six partners could have six separate MTD obligations running simultaneously — each partner needing their own software subscription, their own HMRC registration, and their own quarterly submission cycle. Coordinating this across a partnership without specialist support creates significant administrative risk.
Our GP practice accounting team works with practices to establish a coordinated approach — using consistent software across all partners, sharing expense category structures, and managing quarterly submissions as part of an ongoing service rather than a quarterly panic.
Penalties for Non-Compliance: What Happens If You Miss a Submission
HMRC is operating a soft landing for quarterly penalty points in 2026/27 — meaning late quarterly updates will not generate penalty points this year. However, this grace period ends on 5 April 2027. From 2027/28, the full penalty points system applies.
How the penalty points system works from 2027/28:
- Each late quarterly update generates one penalty point
- Reaching four penalty points triggers a £200 fixed penalty
- Points can be reset by maintaining a period of compliance
- Late payment of tax still generates interest and surcharges in 2026/27 and beyond
Late final declaration penalties are separate and more severe — failure to submit the annual final declaration on time results in penalties consistent with current Self Assessment late filing rules.
Warning: Do not treat the 2026/27 soft landing as permission to delay. Every quarter you miss in 2026/27 is a quarter of bad habits formed and a quarter of records that will need to be reconstructed for your final declaration. The practices and individual doctors who use 2026/27 properly will find 2027/28 straightforward. Those who wait will face a painful compliance catch-up. If you are concerned about your current position, contact our team for an immediate review.
MTD and Your NHS Pension: Does It Change Anything?
A common question from GP partners and hospital doctors is whether MTD for Income Tax affects their NHS pension reporting or annual allowance position. The short answer is no — MTD is a reporting and record-keeping regime for income tax purposes and does not alter the NHS pension scheme rules, annual allowance calculations, or the Scheme Pays mechanism.
However, there is an indirect benefit. Quarterly MTD submissions give both you and your accountant better real-time visibility over your income trajectory throughout the year. This makes it easier to spot early in the year if your total income is approaching the tapered annual allowance threshold (currently £260,000 adjusted income), allowing pension contribution planning to be done proactively rather than reactively after year-end.
MTD for Doctors with Multiple Income Sources
Many healthcare professionals have income from several sources simultaneously — NHS salary (PAYE), GP partnership drawings, locum income, private practice, and rental property. The interaction between these sources under MTD requires careful management.
PAYE income from an NHS employer is excluded from MTD — it is already taxed at source and does not need to be reported in quarterly updates. However, it does need to be included in the final annual declaration to ensure the correct total tax position is calculated.
The qualifying income threshold for MTD is assessed on your self-employment and property income only — not your PAYE salary. So a doctor earning £40,000 NHS salary (PAYE) and £35,000 from a GP partnership is not in Phase 1. But a doctor earning £25,000 NHS salary and £55,000 from a combination of locum income and property rent is in Phase 1, even though their total income from the partnership or locum work alone might seem modest.
Navigating this correctly requires a careful assessment of your individual income profile. Our personal tax specialists for healthcare professionals can confirm your MTD status and set up the right system for your specific circumstances.
Frequently Asked Questions
I am a locum doctor who has always done my own Self Assessment online. Can I continue to do this?
No. Once you are within the MTD regime, HMRC’s own online Self Assessment filing service is no longer available to you. You must use MTD-compatible software for all submissions — both quarterly updates and the final annual declaration. This is one of the most important practical changes that many sole trader locums are not yet aware of.
My gross locum income is above £50,000 but my profit after expenses is only around £28,000. Am I still in scope?
Yes. MTD thresholds are based on gross income — before expenses. If your gross receipts from locum work or any combination of self-employment and property income exceed £50,000, you are in Phase 1 regardless of your net profit. This is one of the most common misconceptions about MTD eligibility.
I am a GP partner. Does the partnership need to register for MTD, or do I register as an individual?
Each individual GP partner registers for MTD personally in respect of their own qualifying income. The partnership itself is not yet brought within MTD (general partnerships are currently excluded from the mandate). However, each partner who individually has qualifying income above the threshold must comply.
What if I have not yet registered for MTD and the first quarter has already started?
Register as quickly as possible. The 2026/27 soft landing means you will not receive penalty points for late quarterly updates this year, but you should still aim to submit Q1 (covering 6 April to 5 July 2026) by the 5 August deadline. Contact our team and we can register you with HMRC and set up the right software within days.
Will MTD change how much tax I pay?
No. MTD changes how and when you report income — it does not change the amount of tax due. The same income, the same expenses, and the same tax rates apply. The difference is that your liability becomes visible in real time throughout the year rather than calculated once annually.
Summary: Your MTD Action List for April 2026
MTD for Income Tax is not something to observe from a distance any longer — it is a live legal obligation for every GP partner and locum doctor with gross qualifying income above £50,000. The first quarterly submission window is already open and the first deadline is 5 August 2026.
The steps to take right now are clear: confirm whether you are in scope, register with HMRC through your accountant, choose and set up MTD-compatible software, connect your bank account, and begin recording income and expenses digitally from 6 April 2026.
Working with a specialist healthcare accountant who understands both the MTD technical requirements and the specific income profile of GP partners and locum doctors makes this transition significantly smoother. The risk of getting it wrong — incorrect expense categories, missed submissions, or unregistered taxpayers — is far greater than the cost of getting the right support in place now.
If your bookkeeping is not yet digital, your software is not yet set up, or you are unsure whether you are in scope, do not wait another quarter.
Book a free consultation with Kudos Accounting → kudosaccounting.co.uk/contact-us/