Making Tax Digital for Musicians: What the First Cohort Has Taught Us Before April 2027
Updated: 3 days ago
Making Tax Digital for Income Tax is no longer something that is simply “on the way”. It is here.
The first mandatory group of sole traders and landlords entered the system on April 6th 2026. By the time we are writing this, they have completed their first quarterly-update deadline, on August 7th 2026. Their second deadline falls on November 7th, so we are still at an early stage. However, even this first submission has given us useful practical lessons about what makes the transition smoother (and what creates unnecessary stress!).
That matters because the next MTD cohort is much larger. If your qualifying income was more than £30,000 in the 2025/26 tax year, you will generally need to use Making Tax Digital for Income Tax from April 6th 2027, unless an exemption applies.
For musicians, this may include income from performing, session work, private teaching, composing and other self-employed work, together with UK property income.
Here is what we have learned so far from the first cohort, and what you can do now to make April 2027 far less daunting.
A quick note: This article provides general information rather than advice tailored to your personal circumstances. HMRC guidance can change, so check the current rules and speak to your accountant or tax adviser if you are unsure.
Look, we know you're busy; so here's the TLDR version via some Popular FAQs
Does Making Tax Digital apply to musicians from April 2027?
If your combined gross qualifying income from self-employment and property was more than £30,000 in the 2025/26 tax year, you will generally need to use MTD for Income Tax from 6 April 2027, unless an exemption or another exclusion applies.
Does PAYE income count towards the £30,000 MTD threshold?
No. PAYE employment income does not count towards qualifying income. The calculation broadly uses gross self-employment and property income before expenses.
Will musicians have to pay tax every quarter under MTD?
No. Quarterly updates do not normally create a quarterly Income Tax payment. The existing payment deadlines and payments-on-account rules continue.
Can I use a spreadsheet for Making Tax Digital?
Potentially, yes. A spreadsheet can be used with suitable bridging software, provided the overall system meets HMRC's digital-record and submission requirements. Check that your chosen products work together and can support both the quarterly updates and your annual tax return.
Do quarterly updates replace the annual tax return?
No. You must still submit an annual tax return through compatible software to finalise your tax position and report other income, reliefs, claims and adjustments.
What are the MTD quarterly-update deadlines?
The deadlines are August 7th, November 7th, February 7th and May 7th. Your software should show the applicable periods and submission dates.
Your Quick Making Tax Digital preparation plan for April 2027
What to do now
Review your 2025/26 Self Assessment figures and calculate your gross qualifying income.
Check HMRC's guidance to establish whether MTD is likely to apply to you.
Speak to an accountant or tax adviser if the answer is unclear.
Review how you currently record income, expenses and overseas tax information.
Consider using a dedicated account for your music business.
What to do during autumn and winter 2026
Compare HMRC-recognised compatible software based on your actual needs.
Decide whether you will use full accounting software or a spreadsheet with bridging software.
Agree who will maintain the records and who will send each submission.
Arrange agent access where required.
Confirm whether you will use standard or calendar update periods.
Practise a weekly or fortnightly bookkeeping routine.
What to do from April 6th 2027
Keep the required digital records from the beginning of the tax year.
Update those records regularly.
Retain receipts, invoices, royalty statements and evidence of overseas tax deducted.
Review the figures before each quarterly submission.
Send an update even where there was no income or expenditure in the latest period.
Keep the four deadlines visible: August 7th, November 7th, February 7th and May 7th.
First, check whether Making Tax Digital applies to you
Before thinking about software or quarterly deadlines, establish whether you are likely to be in the April 2027 group.
HMRC will use the figures on your 2025/26 Self Assessment tax return to assess whether your qualifying income was more than £30,000. Qualifying income is broadly your combined gross income from self-employment and property before expenses are deducted, not your taxable profit.
For example, imagine a violinist has:
£18,000 in performance and session fees;
£9,500 from private teaching; and
£5,000 in UK property income.
Their qualifying income would be £32,500, even if their profit after allowable expenses was considerably lower.
Employment income taxed through PAYE, pensions, savings interest and dividends do not form part of the qualifying-income calculation. There are also particular rules and exemptions that may affect some people, so do not rely on guesswork.
HMRC may write to you, but it remains your responsibility to check whether and when you need to use MTD; even if no letter arrives. Start with your 2025/26 return and HMRC's online eligibility guidance. If your work has changed, an income source has ceased or your situation is not straightforward, raise it early.
Lesson 1: Start earlier than feels necessary
The clearest lesson from the first cohort is that the administration takes longer when everything is left until the quarterly deadline is looming.
You need to understand your obligations, choose a record-keeping method, make sure the software can handle your circumstances, connect or authorise the relevant HMRC services and decide whether you or your agent will make each submission. None of those steps is especially alarming on its own, but together they can become stressful if you begin a few days before the deadline.
There may also be identity checks, missing income sources, software authorisation issues or delays in obtaining information. Starting early gives you time to deal with them without a deadline hanging over you.
If you expect to enter MTD in April 2027, the autumn and winter of 2026 are the right time to prepare. You do not need to wait until March.
Lesson 2: Choose software for your real music business; not just the first submission
The software question has caused a great deal of confusion. There is no single “best” product for every musician, and “MTD compatible” does not automatically mean “suitable for everything you need to report”.
Some people will be comfortable moving to cloud accounting software, particularly if they want bank feeds, receipt capture and access for an accountant. Others may prefer to continue using a spreadsheet with suitable bridging software. HMRC recognises both types of approach, provided the system meets the digital-record and submission requirements.
Before committing to a product, ask whether it can deal with:
Quarterly updates and the annual tax return, or whether you will need a second product;
All your self-employment and property income sources;
Multiple trades or activities, where relevant;
Foreign income and overseas tax deducted;
Your preferred standard or calendar update periods;
Access for your accountant or tax adviser; and
The volume and type of transactions you actually have.
This is particularly important for musicians. A product that works perfectly for a straightforward local teaching business may be less suitable for someone receiving foreign royalties, overseas performance fees and withholding-tax statements from several countries.
Do not buy software solely because it is the cheapest or because a general advert says it is ready for MTD. Check HMRC's compatible-software list, ask the provider detailed questions and consider how you will complete the year-end tax return as well as the quarterly updates.
Our Musician-Focused Software Finder was created to help with this comparison. It looks at practical issues such as features, pricing, support and working style, so you can ask better questions rather than being told that one product suits everyone.
Lesson 3: The routine matters more than the quarterly submission
A quarterly update is a summary created from your digital records. It is not the point at which you should begin trying to reconstruct three months of work.
The people who find the process most manageable are generally those who keep their records up to date throughout the quarter. That does not mean doing bookkeeping every day. For many musicians, a regular weekly or fortnightly slot will be enough.
During that time, you might:
Record or check income received;
Match expenses to receipts;
Review bank transactions;
Save royalty and withholding-tax statements;
Identify personal transactions that have appeared in the business records; and
Follow up on missing information while it is still easy to find.
Leaving the entire job until the end of the quarter makes errors more likely. It is also much harder to remember whether a train journey, online purchase or payment received several months ago related to your work.
The first cohort has reinforced something accountants have said for years: good bookkeeping is not about producing perfect accounts every Friday. It is about creating a small, repeatable habit so that the records do not become a major project four times a year.
Lesson 4: Separate business and personal transactions where possible
A dedicated bank account used only for your self-employed work can make a substantial difference. It gives you a cleaner starting point, makes transactions easier to identify and reduces the risk that business income or expenses are overlooked.
For a musician, that might mean using one account for fees, teaching income, royalties and work-related spending, while keeping household and other personal transactions elsewhere.
This is not a substitute for proper records, and the account must still be reviewed. Transfers, cash income and payments through other platforms will still need attention. However, separating your finances removes a great deal of avoidable noise from the bookkeeping process.
If you currently use one account for everything, moving towards a clearer system before April 6th 2027 will be much easier than trying to untangle it after MTD begins.
Lesson 5: Agree exactly who is doing what
Having an accountant does not necessarily mean that they are maintaining your records or submitting every quarterly update.
Before MTD starts, agree the division of responsibilities in writing. Will you enter and categorise transactions while your accountant reviews and submits the updates? Will they provide a full quarterly-bookkeeping service? Are they dealing only with the annual tax return? Who will monitor deadlines, and who will correct a submission if something is wrong?
You should also discuss when records need to be ready for review. The HMRC deadline may be August 7th, for example, but your accountant may need your information well before that date if they are submitting on your behalf.
The first cohort has shown how easily assumptions can create gaps. A short conversation now can prevent both parties believing that the other person is dealing with a task.
Lesson 6: Not every problem is user error
New reporting systems can come with technical issues. Sometimes the cause is an incomplete setup or a missed step. At other times, the difficulty may sit with the software or HMRC's systems.
If something is not working, take screenshots, note any error messages and record the date and time. Check the software provider's service updates and HMRC's online-service status. If you contact support, keep the reference number and a note of what was agreed.
Most importantly, do not discover the issue on the evening of the deadline. Early preparation gives you time to work out whether you need help from the software provider, HMRC or your adviser.
Lesson 7: Overseas income needs attention throughout the year
Many musicians work internationally or receive royalties from overseas. That can mean foreign-currency payments, withholding tax deducted at source and statements arriving through several different portals.
Do not wait until the end of the tax year to gather this information. Save the supporting documents as they arrive and make sure your chosen record-keeping system can deal with the way you are paid.
In particular, ask your software provider or adviser how foreign income and overseas tax deducted will be handled during the year and in the final tax return. A system that can send a basic quarterly update may not necessarily handle the full year-end position in the way you expect.
Quarterly updates are not four tax returns (or four tax bills)
One persistent misunderstanding is that MTD means completing four full tax returns and paying Income Tax four times a year. That is not the case.
Every three months, compatible software totals the digital records for each relevant business and sends a summary of income and expenses to HMRC. You do not normally need to make accounting or tax adjustments before sending the quarterly update. Each update is cumulative, covering the period from the start of the tax year to the end of that quarter.
You will still complete an annual tax return through compatible software. That is where you finalise the position and include other relevant income, reliefs, claims and adjustments.
Your software may show an estimated tax figure after an update. Treat this as a developing estimate, not a payment demand. MTD does not introduce four new Income Tax payment dates. The usual payment rules, including payments on account where applicable, continue.
The 2027 cohort will not have the first-year quarterly penalty concession
The first mandatory cohort received a transitional concession: HMRC is not applying penalty points for late quarterly updates in the 2026/27 tax year. The updates must still be submitted before the annual tax return can be completed, and the concession does not remove penalties for a late tax return or late payment.
That concession does not extend to quarterly updates for tax years after 2026/27. Under the points-based system, a missed quarterly-update or tax-return deadline can result in a penalty point. The threshold for quarterly obligations is four points. Reaching it triggers a £200 penalty, and each further missed deadline while at the threshold can trigger another £200 penalty.
This is another reason to establish the process before April 2027. The aim is not to create anxiety about penalties; it is to ensure that the deadlines and responsibilities are clear from day one.
The best preparation is a system you can maintain
The first MTD cohort has not reached the end of its first year, so there will be more lessons to come. What is already clear, however, is that successful preparation is less about finding a clever last-minute solution and more about putting a workable routine in place.
Check whether the rules apply to you. Choose software that fits the reality of your music career. Keep your records up to date. Be clear about your accountant's role. And give yourself enough time to resolve questions before the first deadline arrives.
Making Tax Digital for musicians will involve a change of process, but it does not need to become a quarterly crisis.
For more practical support, visit our MTD Software Hub, explore our Guide to Choosing MTD Software, or sign up for the Tax Tips for Musicians newsletter.
Comments