Making Tax Digital 2026: Locum Guide to MTD ITSA

If you are a locum GP, nurse, pharmacist, dentist, physio, or any other healthcare professional who works on a self-employed basis, the way you report tax to HMRC is changing. Making Tax Digital for Income Tax, usually shortened to MTD for Income Tax or MTD ITSA, starts on 6 April 2026 for the first wave of sole traders and landlords.

This is not a small admin tweak. It replaces the once-a-year Self Assessment rhythm with quarterly digital updates, and it requires HMRC-recognised software. If you use a spreadsheet, a paper diary, or a cardboard folder of receipts, that approach stops working from April 2026.

Here is what the rules say, who is in scope, and what to do in the months before the deadline.

What changes on 6 April 2026

From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must:

• Keep digital records of business income and expenses
• Use HMRC-compatible software to send a quarterly update for each business
• Submit a Final Declaration after the tax year ends, replacing the existing Self Assessment tax return for in-scope income

"Qualifying income" means gross income from self-employment plus property, before tax and expenses, in your most recent filed Self Assessment. For the April 2026 start, HMRC looks at your 2024 to 2025 tax year return.

Who is in scope, who is not

In scope from 6 April 2026: anyone with combined self-employment and property gross income above £50,000 in 2024 to 2025.

In scope from 6 April 2027: those with qualifying income above £30,000 in 2025 to 2026.

In scope from 6 April 2028: those with qualifying income above £20,000 in 2026 to 2027. This was announced at Spring Statement 2025 and is now confirmed in policy.

Importantly for healthcare professionals, MTD for Income Tax only counts trading and property income. The following are not in scope:

• Employment income (PAYE), including NHS bank shifts and salaried NHS roles
• Dividend income
• Pension income
• Any income inside a limited company

So if you do, say, £35,000 self-employed locum work plus £40,000 NHS PAYE, only the £35,000 counts toward the threshold. You are not in the first wave. You will likely fall into the £30,000 wave from April 2027 instead.

Limited company locums

If you work through your own limited company, you are not in MTD for Income Tax for that company income at all. Corporation tax stays on its existing Companies House and HMRC timetable, with the CT600 filed annually. You may still be in scope personally if you have property income, or other self-employment income, that crosses the threshold.

Quarterly cadence

The four standard quarterly update periods and deadlines for the 2026 to 2027 tax year are:

Each quarterly update is cumulative, covering the tax year to date, not just the latest three months. Your software handles this automatically.

After the tax year ends, you submit a Final Declaration by 31 January, the same date Self Assessment used. That declaration finalises your figures, includes any other income (employment, dividends, savings, pensions), and triggers the tax bill.

You no longer file a separate Self Assessment return for the income that goes through MTD. The Final Declaration is the new annual return.

Software you can use

HMRC will only accept quarterly updates sent through compatible software. Spreadsheets are still allowed, but only if they are connected to bridging software that submits the digital update to HMRC. Paper records are out.

HMRC keeps a live list of compatible products on its software finder. Several major names are on it or in development, including the usual cloud accounting tools. Check the HMRC list before you commit to anything, because vendor claims and HMRC recognition are not always the same thing.

Penalties

MTD for Income Tax brings in a points-based late-submission system, replacing the old flat-rate penalties.

• You get one point for each missed quarterly update or Final Declaration deadline
• Hit 4 points and you get a £200 penalty
• Each further late submission while at 4 points is another £200

There is a soft landing in year one. HMRC has confirmed there will be no penalty points for late quarterly updates in the 2026 to 2027 tax year. Late payment penalties and interest still apply normally.

Take this as breathing room, not a free pass. The Final Declaration deadline still bites, and the soft landing only covers the first year.

Exemptions

You can apply to be exempt if you are "digitally excluded". HMRC accepts these grounds:

• Age, health condition, or disability that stops you using a computer, tablet, or smartphone
• No internet access at home or business location, with no suitable alternative
• Practising member of a religious society or order whose beliefs are incompatible with digital records

HMRC will not accept "I have always used paper", "I find software difficult", or "it costs more". You apply directly to HMRC and the decision is case by case. Ministers of religion have an automatic exemption.

For most working locums, exemption is not realistic. If you are reading this online, you are not digitally excluded.

What to do now

You have roughly eleven months. Six practical steps:

1. Check your number. Pull up your 2024 to 2025 Self Assessment. If self-employment plus property income crosses £50,000, you are in the first wave. If it crosses £30,000, the 2027 wave is yours.
2. Open a separate business bank account if you have not already. Mixing personal and locum income makes digital record-keeping painful and increases the chance of misreported quarterly figures.
3. Pick MTD-compatible software from the HMRC software finder. Run a parallel month or two before April 2026 so the migration is not happening live.
4. Talk to your accountant, if you use one, about who files the quarterly updates: you, them, or both. Pricing models are shifting in response to MTD, so confirm fees in writing before April.
5. Sign up with HMRC when the service opens for your situation. Signing up is a separate step from filing Self Assessment, even if you are already registered.
6. Categorise expenses cleanly from day one. Mileage, equipment, indemnity insurance, GMC or NMC fees, professional subscriptions: these all sit in specific HMRC categories. Software handles this if you set it up properly at the start.

FAQ

Does MTD apply to my NHS bank work? No. PAYE income is outside MTD for Income Tax. Only your self-employed locum work and any property income count toward the threshold.

I work through a limited company. Am I affected? Not for the company itself. Corporation tax filing is unchanged. You are only affected personally if you have qualifying self-employment or property income above the threshold in your own name.

Do I still file a Self Assessment return? Not in the same form. The annual Final Declaration replaces the Self Assessment return for the income that goes through MTD, but other income (PAYE, dividends, savings, pensions) is reconciled within the same declaration.

Can I keep using a spreadsheet? Yes, but only with bridging software that connects the spreadsheet to HMRC. Standalone spreadsheets and paper records are not compliant.

What if I miss a quarterly update in year one? No penalty points apply for late quarterly updates in 2026 to 2027. From 2027 to 2028 onward, you accumulate points and risk a £200 penalty at 4 points.

The headline message for self-employed locums is straightforward. If your locum work plus any property income clears £50,000, you have until April 2026 to be on compatible software with clean digital records. Treat the next eleven months as runway, not slack.

Sources

• Check if you're eligible for Making Tax Digital for Income Tax (gov.uk)
• Reduction of the mandation threshold to £20,000 from April 2028 (gov.uk)
• MTD for Income Tax for sole traders and landlords (gov.uk)
• Send quarterly updates (gov.uk)
• Penalties for Making Tax Digital for Income Tax (gov.uk)
• Find software compatible with MTD for Income Tax (gov.uk)
• Get an exemption from MTD for Income Tax (gov.uk)