Making Tax Digital for driving instructors - what you need to know before April 2026

If you're a self-employed ADI earning over £50,000 a year, Making Tax Digital for Income Tax (MTD for ITSA) applies to you from April 2026. If you earn between £30,000 and £50,000, it's April 2027. Either way, it's coming - and the changes are bigger than most instructors realise.

This guide covers exactly what MTD means for you, what you need to do before the deadline, and the common mistakes that will catch ADIs out.

What MTD for Income Tax actually is

First, a common confusion to clear up: MTD for Income Tax is completely different from MTD for VAT.

MTD for VAT has been live since 2019 and applies to VAT-registered businesses. Most driving instructors aren't VAT-registered (the VAT threshold is £90,000 and the majority of ADIs earn below that), so you may not have dealt with any MTD requirements at all until now.

MTD for Income Tax replaces the annual Self Assessment tax return for self-employed people. Instead of filing once a year for the previous tax year, you'll submit quarterly updates to HMRC plus one annual finalisation.

That's four quarterly submissions per year, every year, plus one final declaration - instead of one annual return.

Who it affects and when

These thresholds are based on your gross self-employed income - total income before expenses. So if you charge £30 per lesson and teach 40 hours a week, 50 weeks a year, your gross income is £60,000. That puts you in the first wave.

If you earn from multiple sources (e.g. franchise income plus your own pupils), HMRC may count combined income. Check your last Self Assessment return if you're unsure which band applies to you.

What quarterly updates involve in practice

Under MTD, you'll need to submit a summary of your income and expenses to HMRC every quarter. The quarters run:

• Q1: 6 April to 5 July - deadline 7 August
• Q2: 6 July to 5 October - deadline 7 November
• Q3: 6 October to 5 January - deadline 7 February
• Q4: 6 January to 5 April - deadline 7 May

After Q4, you have until 31 January the following year to submit your final declaration (replacing the current Self Assessment deadline).

The quarterly submissions aren't full accounts - they're summaries of income and expenses by category. Think of them as four mini tax returns per year instead of one big one.

The good news: HMRC won't expect perfection in quarterly updates. Minor corrections can be made in the final declaration. The bad news: you'll need accurate digital records throughout the year to make even the quarterly summaries.

Why paper records and spreadsheets won't cut it

This is where most ADIs face a problem.

HMRC requires that you keep digital records using MTD-compatible software. Paper appointment books, handwritten income logs, and standard spreadsheets like Excel or Google Sheets on their own do not qualify. Even if you export your spreadsheet data into an MTD submission tool, HMRC requires the records themselves to be kept digitally from the point of transaction.

In practice, this means:

• Every lesson you deliver must be recorded digitally - the date, amount, and pupil
• Every expense must be logged digitally - fuel, insurance, CPD costs
• The software must be able to submit those records directly to HMRC via the MTD API (not via you manually entering figures)

Bridging software exists that connects spreadsheets to HMRC - but given the quarterly submission frequency, most ADIs will find purpose-built software far less time-consuming.

What to do right now

Here's a practical action plan based on where most ADIs are today.

1. Confirm which year applies to you. Look at your 2024/25 or 2025/26 Self Assessment return for your total self-employed income. If it's over £50,000, you're in the April 2026 wave.

2. Choose HMRC-compatible software. HMRC maintains a list of software that has passed MTD compatibility testing. Look for software specifically built for self-employed people - not just generic accounting software. For ADIs, the best options combine lesson management with income tracking.

3. Sign up for MTD via your HMRC online account. You won't automatically be enrolled - you need to sign up. HMRC will open sign-ups closer to the deadline, but you can check your Government Gateway account now to see what's available.

4. Start keeping digital records immediately. Even if your deadline is April 2026, starting digital records now means less scrambling at year-end. Every lesson logged today is data you won't have to reconstruct.

5. Speak to your accountant. If you have one. MTD changes how your accountant works with your records too - they'll need access to your digital records rather than a year-end spreadsheet.

How DrivePro handles MTD

DrivePro is built with HMRC MTD compliance included. When you log a lesson or record an expense in DrivePro, that data flows through to your quarterly submissions - no separate accounting software required, no bridging tools, no re-entering data.

DrivePro connects directly to HMRC's MTD API, so your quarterly submissions can be reviewed and submitted from within the app. You still review and confirm before anything goes to HMRC - but the preparation happens automatically as you use the system day-to-day.

Common misconceptions

"I already do Self Assessment, so I'm fine." Self Assessment is what MTD for Income Tax replaces. Being enrolled in Self Assessment today doesn't exempt you from MTD - it means you'll be migrating away from the annual return to quarterly submissions instead.

"I can sort this out next year." If your deadline is April 2026, you should already be using compatible software. HMRC has signalled that penalties will apply from the start. Waiting until March 2026 leaves you scrambling to get a year's worth of records into a new system.

"My accountant will sort it." Your accountant can advise and submit on your behalf - but they cannot keep your digital records for you. You need to log your lessons and expenses digitally throughout the year.

"It only applies to big businesses." The £50,000 threshold catches a significant number of full-time ADIs. The drop to £30,000 in 2027 will include most.

The bottom line

MTD for Income Tax is the biggest change to self-employed tax administration in a generation. For driving instructors, it means quarterly digital submissions to HMRC - starting April 2026 if you earn over £50,000, April 2027 if you earn over £30,000.

The three things to do now: confirm your income band, choose HMRC-compatible software that's built for ADIs, and start keeping digital records. Quarterly submissions are manageable with the right system. They're a significant headache without one.