Last checked 19 October 2026
Quick answer
Once you’re using Making Tax Digital (MTD) for Income Tax, most changes are made in your HMRC online account. A new business normally joins MTD only after it has appeared on a tax return. If you stop trading, you tell HMRC by the quarterly update deadline for that period, send a final update and include it in your tax return. You may be able to opt out if your qualifying income stays below the threshold for 3 years in a row. You can change software at any time, but keep your old records.
This is general information, not tax advice. Check GOV.UK or speak to an accountant about your situation. Why we say this.
Businesses change. You might add a second line of work, wind one down, have a quiet few years or fall out with your software. HMRC’s MTD guidance covers each of these, and this guide pulls the answers together. HMRC says you can make most changes in your HMRC online account, and some in your software.
Starting a new business
HMRC’s Add or cease income sources guidance says that if you have a new self-employment or property income source, you only need to start creating digital records and sending quarterly updates for it after you’ve included it in a tax return.
HMRC’s example
Someone who needs to use MTD starts a new business on 1 July 2026. It goes on their 2026 to 2027 tax return for the first time, due by 31 January 2028. After that, they start digital records and quarterly updates for the new business from 6 April 2028.
HMRC’s digital records guidance gives a similar example for someone starting a new business in May 2027: the first tax return including it is for 2027 to 2028, due by 31 January 2029, so digital records start from 6 April 2029.
What you need to do, according to HMRC:
- Check your software can report the new income source.
- Add the new source in your HMRC online account before you submit the tax return that includes it, with details such as the start date.
- Start digital records and quarterly updates for it after that return.
HMRC says you can choose to bring the new income into MTD from the start instead, by selecting that option in your online account.
New properties for landlords
HMRC says that if you’re already a UK landlord and start renting another UK property, it isn’t a new income source, because all your UK properties form one UK property business. You create digital records for it from when you start receiving rent.
Stopping a business
HMRC says ceasing a source means your business has stopped trading, or you’ve stopped receiving property income. You tell HMRC in your online account by entering the date it ended, and you must do so by the quarterly update deadline for the period in which it stopped.
If one of several businesses stops
HMRC says you tell it in your online account and complete all outstanding quarterly updates for that business up to when it stopped. You carry on as normal for your other businesses.
HMRC’s example
If a business stopped in May 2026, its owner sends the quarterly update due by 7 August 2026, and no further updates for that business. Its income then goes in the 2026 to 2027 tax return.
If everything stops
If all your self-employment and property income stops, HMRC says you must:
- tell HMRC the date it stopped, in your online account
- send the final quarterly update for the period that includes that date
- include the income in your tax return for that year, which you still send using MTD software
HMRC says that after the tax year in which the income stopped, you won’t need to use MTD. You still need to keep your digital records to support your tax return.
GOV.UK’s Stop being self-employed guide also says you must tell HMRC if you’ve stopped trading as a sole trader, and send a final tax return. It lists other things to check, such as cancelling a VAT registration and closing a payroll scheme if you employ people.
Opting out if your income falls
HMRC’s If your circumstances change guidance says you can opt out if you no longer need to use MTD because:
- you amended your Self Assessment return for the previous tax year, taking your qualifying income below the relevant threshold, or
- your qualifying income has been below the relevant threshold for 3 consecutive years
HMRC’s example, for the group who started in April 2026
Someone who started MTD in April 2026 can opt out after the end of the 2028 to 2029 tax year if their qualifying income is £20,000 or less on their 2026 to 2027 return, their 2027 to 2028 return and their fourth quarterly update for 2028 to 2029. They’d need to have sent that fourth update by 7 May 2029, and then wouldn’t need to use MTD for 2029 to 2030.
HMRC says the opt-out option only appears in your online account if you’re eligible. If you opt out, HMRC says you no longer create digital records or send quarterly updates, any updates already sent for that tax year are deleted, and you still send a Self Assessment return for the year. If you don’t opt out, you can keep using MTD voluntarily.
Our guide to the £30,000 threshold explains how qualifying income is worked out.
Becoming exempt
HMRC says you may become eligible for an exemption after signing up, for example if you become digitally excluded, meaning it’s not reasonable for you to use software. If HMRC confirms you’re exempt, you stop creating digital records and sending quarterly updates, but you still report your income in a Self Assessment return, and your penalties change. Our guide to MTD exemptions explains how to apply.
Changing your software
HMRC says you can change software at any time, though it may be simpler to change at the end of a tax year. You can also use different compatible software for different income sources.
- At the end of a tax year: you don’t need to import previous years’ records into the new software, but you must store them securely and be able to access them.
- During a tax year: you’ll need to import your digital records for the current year into the new software, or recreate them. If you use bridging software, you link the new software to your records and remove the old link.
Whichever you do, HMRC says you must keep your digital records for at least 5 years from the submission deadline for each tax year. Its example: records for 2026 to 2027, whose return is due by 31 January 2028, must be kept until at least 31 January 2033. Exporting your records from your old software before your subscription ends is worth doing. Our guide to bookkeeping software covers choosing a new product.
Changing your accountant
HMRC says that if you change, add or remove a tax agent, previous years’ digital records aren’t transferred between agents automatically. It says you should make sure you have access to your old records, that any new agent is authorised for MTD, that your software products work together, and that you remove an old agent’s authorisation in your online account if they stop acting for you. Our guide to accountant or DIY explains main and supporting agents.
If you become insolvent
HMRC says that if you keep receiving self-employment or property income after a formal insolvency procedure, you keep using MTD. If you had late submission penalty points, HMRC resets your points to zero. GOV.UK has help if you become insolvent.
Frequently asked questions
I’ve started a second business. Does it need quarterly updates straight away?
Not usually. HMRC says you start digital records and quarterly updates for a new source after it has been included in a tax return, unless you choose to start earlier.
I’ve stopped trading. Do I still send a tax return?
Yes. HMRC says you send the final quarterly update and include the ceased income in your tax return for that year, using MTD software.
Can I leave MTD if my income drops?
HMRC says you can opt out if your qualifying income has been below the relevant threshold for 3 consecutive years, or if an amended return takes it below. The option appears in your online account if you’re eligible.
Can I switch software halfway through the year?
Yes. HMRC says you’ll need to import or recreate your digital records for the current year in the new software.
Sources
All checked on 19 October 2026.
- If your circumstances change (GOV.UK)
- Add or cease income sources (GOV.UK)
- Create digital records (GOV.UK)
- Stop being self-employed (GOV.UK)
Where to check
What changed. : . 19 October 2026: First published.
