Making Tax Digital for Care Providers
Written and reviewed by the Care Home Accountants editorial team. Last reviewed 28 July 2026.
Making Tax Digital for Income Tax changes how unincorporated care providers keep records and report to HMRC, moving from a single annual return to quarterly digital updates. It arrives in stages from April 2026.
We explain who it applies to, the income thresholds and start dates, and why incorporated homes are outside it for now.
Who Making Tax Digital Applies To
Making Tax Digital for Income Tax applies to sole traders and partnerships with qualifying income above the thresholds. A home care provider running as a sole trader, or a partnership operating a small home, is squarely within scope once income passes the trigger.
It sits alongside, and does not replace, the annual figures we prepare in the wider accounts and VAT work. The obligation is about how and how often information reaches HMRC.
The Income Thresholds and Start Dates
The rollout is staged by income. Providers with qualifying income over £50,000 are brought in from 6 April 2026, those over £30,000 from 6 April 2027, and those over £20,000 from 6 April 2028.
The threshold is measured against gross income, not profit, so a provider can be caught while running on a modest margin. HMRC sets out exactly if and when you need to use Making Tax Digital for Income Tax.
Sole Traders and Partnerships, Not Companies
The regime is for unincorporated businesses. A care home run through a limited company is not within Making Tax Digital for Income Tax, because a company reports through corporation tax and its own returns instead.
The choice of structure therefore affects which reporting rules bite. Company profits face corporation tax at 19% up to £50,000 and 25% over £250,000, a separate system from the income tax this regime digitises.
Quarterly Updates and Digital Records
In scope, a provider keeps digital records and sends a summary of income and expenses to HMRC each quarter, then finalises the year through a closing declaration. The tax is still calculated on the year as a whole against the £12,570 personal allowance and the income tax bands.
The published income tax rates continue to apply to the final figure. How the underlying income arrives, and its exempt VAT treatment, is set out in our guide to care home fees and funding.