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Guideby Gair

Making Tax Digital: what it actually means if you drive for a living

Making Tax Digital for Income Tax landed in April 2026, and a lot of self-employed drivers still have not been told clearly what it means for them. The short version: if it applies to you, the single Self Assessment return you file every January has been replaced by five separate touchpoints with HMRC a year.

That sounds worse than it is. A quarterly update is not a tax return, and you do not pay tax four times a year. But it does mean the shoebox-of-receipts approach has run out of road, because the records now have to be digital.

Who does Making Tax Digital apply to, and when?

It depends on your qualifying income, and it is being phased in:

  • Over £50,000 - you are already in, from 6 April 2026
  • Over £30,000 - you join from April 2027
  • Over £20,000 - you join from April 2028

The word that catches people out is qualifying income. It means your gross income from self-employment and property, added together, before you take a single expense off. Not your profit. So a driver turning over £58,000 who takes home £24,000 after fuel, insurance and everything else is in from April 2026, even though the money they actually live on is nowhere near £50,000.

If you drive for more than one platform, it is the total that counts, not each one separately.

What is an MTD quarterly update? (It is not four tax returns)

This is the bit worth understanding properly, because it is where most of the panic comes from.

Four times a year you send HMRC a summary of your income and expenses so far. That is it. No tax calculation, no payment, no declaration that everything is final. It is a running total, and if you got something slightly wrong in quarter one you simply correct it in quarter two.

The standard quarters end on 5 July, 5 October, 5 January and 5 April, and each update is due about a month later:

  • Quarter ending 5 July - due 7 August
  • Quarter ending 5 October - due 7 November
  • Quarter ending 5 January - due 7 February
  • Quarter ending 5 April - due 7 May

You can also elect to use calendar quarters instead, ending 30 June, 30 September, 31 December and 31 March, which is easier if your bookkeeping already runs on month ends.

Then, after the tax year finishes, you make a Final Declaration by 31 January. That is the one that replaces your old Self Assessment return, where you confirm everything, add anything else HMRC needs to know about, and settle up. Your payment deadline has not moved.

What counts as a digital record under MTD

The rule is that your income and expenses have to be recorded and kept digitally, and the quarterly updates have to reach HMRC from software rather than by typing figures into a website.

A photo of a receipt is not a digital record on its own. Nor is a shoebox you tip out in January. A spreadsheet can count, provided it can talk to HMRC through bridging software. Most people will find it easier to use an app that keeps the records and does the submitting in one place.

Where mileage fits into Making Tax Digital

For most drivers, mileage is the single largest deduction, and it is worth more than it used to be. From 6 April 2026 the approved mileage rate rose to 55p a mile for your first 10,000 business miles, then 25p after that. Motorbikes stay at 24p. The full breakdown is in our HMRC mileage rates guide.

On 12,000 business miles that is £6,000 of deduction. At a basic rate of 20% plus Class 4 National Insurance, that is well over a thousand pounds that stays in your pocket, and it only works if you can show the miles.

Two things matter more under MTD than they did before:

  • Your mileage needs to be there every quarter, not reconstructed the following January. A quarterly update with your mileage missing understates your expenses and overstates your position.
  • You need a dated record per journey, not a round number at year end. Date, purpose, and distance, kept as you go. If you are unsure which journeys qualify, see what counts as business mileage.

One important catch: if you claim the mileage rate, you cannot also claim fuel, insurance, servicing, MOT or depreciation for that vehicle. The rate already covers them. You can still claim things it does not cover, like parking, tolls and the business share of your phone bill. Our business mileage guide walks through the choice in more detail.

Is MileClear MTD compatible yet?

We will be straight with you, because there is a lot of marketing about MTD readiness that does not survive contact with the detail.

MileClear has the full Making Tax Digital journey built. You can connect a HMRC account, see your obligations, preview the figures and walk through a submission. It currently runs against HMRC's test service, and it is labelled as beta on every screen inside the app, because we are still going through HMRC's production accreditation. Until that finishes, submissions do not reach your real tax record, and your live tax position is unaffected.

Two limits worth knowing even once it is live. MileClear submits self-employment income only, so if you also have UK or foreign property income you will need MTD-compatible software for that as well. And it handles your in-year quarterly updates, not the year-end Final Declaration, which you will finish with HMRC or other compatible software.

We will say plainly when that changes. No dates promised until they are real.

What self-employed drivers should do now

If you are over the threshold, or close to it, the useful work is not choosing software. It is making sure that from today your mileage and expenses are being captured as you go, so that when a quarterly deadline arrives the figures already exist.

That part MileClear does today, free: automatic drive detection, unlimited trips, your full history, and expense logging. Whatever you eventually use to file, the records will be ready. If you are still choosing an app, we compared the options in our free mileage tracker buyer's guide.

If you are not over the threshold yet, you have until April 2027 or April 2028 - but the habit is the hard part, not the filing. Starting now costs nothing.

Common questions

Does Making Tax Digital apply to me if I am self-employed?

It depends on your qualifying income and when you cross the threshold. From 6 April 2026 it applies to sole traders and landlords with qualifying income over £50,000. From April 2027 it extends to those over £30,000, and from April 2028 to those over £20,000. Qualifying income means your gross income from self-employment and property added together, before any expenses are deducted, so it is based on turnover rather than profit.

Is a quarterly update the same as a tax return?

No. A quarterly update is a summary of your income and expenses so far in the tax year, sent to HMRC from compatible software. There is no tax calculation and nothing to pay at that point, and figures are cumulative, so a mistake in one quarter is simply corrected in the next. Your tax is settled once a year through the Final Declaration, which replaces the old Self Assessment return and is due by 31 January as before.

What are the MTD quarterly update deadlines?

Using the standard quarters, the periods end on 5 July, 5 October, 5 January and 5 April, and each update is due on the 7th of the following month: 7 August, 7 November, 7 February and 7 May. You can instead elect to use calendar quarters ending 30 June, 30 September, 31 December and 31 March, which suits you better if your bookkeeping already runs to month ends.

Can I still claim mileage under Making Tax Digital?

Yes. The approved mileage rates are unchanged by MTD itself, and from 6 April 2026 the rate is 55p per mile for the first 10,000 business miles and 25p after that, or 24p for motorbikes. What changes is that your mileage needs to be captured digitally as you go, so it can be included in each quarterly update rather than reconstructed at the end of the year. If you claim the mileage rate you cannot also claim fuel, insurance, servicing or repairs for the same vehicle, because the rate already covers them.

Do I need an app for Making Tax Digital, or will a spreadsheet do?

A spreadsheet can be acceptable, because the requirement is that records are kept digitally and that updates reach HMRC from software rather than being typed into a website. A spreadsheet therefore needs bridging software to submit. Many self-employed people find it simpler to use one app that keeps the records and submits them, particularly where mileage is the largest deduction and needs capturing throughout the quarter.

Is MileClear MTD compatible?

The full Making Tax Digital journey is built into MileClear, but it currently runs against HMRC's test service while we complete HMRC's production accreditation, and it is labelled as beta on every screen in the app. Until that finishes, submissions do not reach your real tax record. MileClear covers self-employment income only, so property income needs separate MTD-compatible software, and it handles in-year quarterly updates rather than the year-end Final Declaration. Mileage and expense tracking are free and available today, so your records will be ready whichever software you eventually file with.