Making Tax Digital for driving instructors: what changes in 2026, 2027 and 2028

What Making Tax Digital for Income Tax is

Making Tax Digital for Income Tax, MTD for Income Tax for short, changes how self-employed people keep their books and tell HMRC about them. Instead of gathering a year of receipts for one Self Assessment return, you keep digital records as you go and send HMRC a short update every quarter, using software HMRC recognises.

A quarterly update is a summary: the totals for each kind of income and expense. HMRC does not receive your receipts or invoices. You still send a tax return for the year, and you still pay your tax by 31 January after the tax year ends, as you do now.

When it applies to you

It applies once your qualifying income passes a threshold, and the threshold comes down each year:

HMRC checks the Self Assessment return you sent for the year in the middle column, and writes to you when you need to start.

It counts your takings, not your profit

This is the part that catches driving instructors out. Qualifying income is your total income from self-employment and property before expenses: your turnover, not your profit.

An instructor's costs are high. Fuel, insurance, the car itself and, for many, a franchise fee all come off before anything is profit. None of them comes off qualifying income. An instructor who takes £34,000 in lesson fees in the 2025 to 2026 tax year uses Making Tax Digital from April 2027, however much lower their profit is.

If you also have income from property, such as rent from a flat you let, it is added to what you take in lesson fees.

The quarterly deadlines

Each update covers the tax year so far, and is due on the 7th, about a month after its period ends:

You can choose calendar quarters instead, from 1 April to 30 June and so on, and the deadlines stay the same.

In your first year, you still send the previous year's tax return the usual way. If you started in April 2026, your return for 2025 to 2026 is due by 31 January 2027, and your first return under the new rules, for 2026 to 2027, by 31 January 2028.

Penalties for a late update

HMRC is not giving penalty points for late quarterly updates in the 2026 to 2027 tax year, though every update still has to be sent before you can file your return. After that, each late update earns a penalty point, and at 4 points you get a £200 penalty. Points already apply to late tax returns, and penalties for paying late are separate.

What to do now

1. Find your last Self Assessment return and check your turnover against the table above.
2. Record every lesson payment as it happens, whether it came by card, cash or bank transfer.
3. Photograph the receipt for every cost you claim, and keep it with the record.
4. Choose software HMRC recognises to send your updates, or an accountant who will send them for you.
5. Sign up on GOV.UK when HMRC writes to you, or before, if you would rather start early.

Where Doovor fits

Doovor records every lesson payment as it happens, by card, cash or bank transfer, and on Pro keeps your expenses with a photo of each receipt. It exports your income and expenses by tax year and by quarter, ready for the software you send updates with or for your accountant. It does not send updates to HMRC itself. See how it works for instructors, or read how to choose driving instructor software.

This guide is general information, not tax advice. HMRC or an accountant can tell you how the rules apply to you.