Making Tax Digital for Hospitality
Written and reviewed by the Hospitality Accountants editorial team. Last reviewed 27 July 2026.
Making Tax Digital for Income Tax changes how many hospitality owners keep records and report to HMRC. Instead of one annual Self Assessment return, affected sole traders and partners will keep digital records and send quarterly updates. The change arrives in stages from April 2026, and which stage catches you depends on your income. This guide sets out the thresholds, the dates, and who is in and out of scope.
The trigger is turnover, not profit, so a business with thin margins can still be pulled in. Digital record-keeping is already the norm for VAT, and our hospitality VAT returns service works on that basis, which makes the move to quarterly income tax reporting less of a jump.
The MTD for Income Tax Thresholds and Dates
Making Tax Digital for Income Tax is phased in by income level. It applies from 6 April 2026 to those with qualifying income over £50,000, from 6 April 2027 to those over £30,000, and from 6 April 2028 to those over £20,000. Each stage brings a new band of smaller businesses into the regime.
The dates are fixed to the start of the tax year, so a business crossing a threshold needs its digital records running from the 6 April that applies to it. HMRC explains the timing in its guidance on when to use Making Tax Digital for Income Tax.
Qualifying Income Before Expenses
Qualifying income is gross turnover before expenses, not the profit left after costs. This catches out hospitality in particular, because a restaurant can have high takings and a slim margin. A business turning over £60,000 with £10,000 of profit is still over the £50,000 threshold and in scope from April 2026.
Where you run more than one trade, or also let property, the qualifying income is added together. It is worth checking the combined gross figure rather than assuming a single modest business stays out.
Who MTD for Income Tax Applies To
The regime applies to sole traders and partners in a trade, and to landlords. It does not apply to companies, which report through Corporation Tax and its own filing rules rather than Self Assessment. So a restaurant run through a limited company is outside MTD for Income Tax, though its directors may be caught on other income.
This makes the choice of structure relevant to the compliance burden. A company sits outside these quarterly updates, which is one factor among several in the wider structure decision.
Digital Records and Quarterly Updates
Under the regime you keep your income and expenses in digital form and send a summary to HMRC every quarter, followed by a final declaration after the year end. The quarterly updates are cumulative summaries, not four full tax returns, but they do require the underlying records to be current rather than reconstructed at year end.
For a busy kitchen the practical shift is bookkeeping little and often. We set up the digital records so each quarter's update is a by-product of routine bookkeeping rather than a scramble.
How VAT MTD Differs From Income Tax MTD
Making Tax Digital already applies to VAT-registered businesses, which file VAT digitally through compatible software. The income tax version extends the same digital principle to Self Assessment, but they are separate obligations with their own thresholds and timing. Registering for one does not enrol you in the other.
A VAT-registered sole trader over the income threshold will have both running at once: digital VAT returns and quarterly income tax updates. Where registration for VAT is itself in question, the gov.uk guidance on when to register for VAT sets the £90,000 point.