Making Tax Digital for Income Tax – What landlords and sole traders need to know

The first major Making Tax Digital (MTD) for Income Tax filing deadline is now approaching. Individual landlords and business owners who were mandated to use MTD from 6 April 2026 are required to submit their first quarterly update to HM Revenue & Customs (HMRC) by 7 August 2026. For many taxpayers, this will be their first experience of maintaining digital records and reporting income through MTD-compatible software.

With the deadline fast approaching, now is the time to review whether you are ready to file.

If you are unsure whether the new rules apply to you, or would like assistance with your tax affairs, record keeping or quarterly submissions, contact our tax team today for advice and support.

What is Making Tax Digital for Income Tax ?

From 6 April 2026, self-employed individuals and landlords with qualifying income over £50,000 must comply with MTD for Income Tax. Those with qualifying income over £30,000 are due to join from 6 April 2027 and those with qualifying income over £20,000 are due to join from 6 April 2028.

Being mandated for MTD means that you are required to:

• Keep digital records of your business income and expenses in MTD-compatible software
• Submit business tax information to HMRC digitally through that software each quarter, rather than manually entering figures into HMRC’s online services
• Submit an end of year statement to HMRC with your non-business information and any tax adjustments, instead of an annual self-assessment tax return.

Whilst MTD compliance is about reporting income quarterly it does not mean that you need to pay income tax quarterly. The usual income tax payment dates remain the same under MTD.

Who is not currently affected?

Not everyone falls within the scope of the new rules.

Members of partnerships, trustees of trusts, personal representatives administering estates and deputies appointed by the Court are not currently subject to mandatory MTD for Income Tax in those capacities. However if you are exempt under these rules, you may still need to consider your own personal tax affairs separately.

HMRC also provides limited exemptions where it is not reasonably practicable for an individual to use digital tools, although each case is considered on its own merits.

What will taxpayers have to do?

HMRC will no longer regard a once-a-year exercise of gathering paperwork and preparing a Self Assessment return as sufficient for affected taxpayers.

Individuals within the scope of MTD for Income Tax are required to keep and maintain digital records of business and property income and expenses to form the basis of the quarterly submissions to HMRC through MTD-compliant software. There must be a digital link between the records and the submission.

Relying on spreadsheets, paper records or manual bookkeeping systems is not enough to satisfy the new requirements. While spreadsheets may still be used in some circumstances this will require bridging software to file the MTD reports themselves.

Crucially, taxpayers who have relied on HMRC’s own website to file their tax returns can no longer do so. To comply with the rules taxpayers must either engage an agent to file on their behalf, or purchase MTD-compliant software themselves.

How professional advice can help

The transition to MTD is not simply a software exercise. It is also an opportunity to review record-keeping procedures, improve financial reporting and ensure tax affairs are managed efficiently. This modernisation might result in better quality financial records, reduced risk of errors, and greater oversight and earlier understanding of future income tax liabilities.

We can assess your current record-keeping systems and identify what changes may be required to be MTD compliant. We will work with you to transition from spreadsheets and manual data entry to a compliant cloud-based process using Xero accounting software.

Our team can prepare, review and submit your quarterly updates and end of period statement, reviewing your affairs and assist you in claiming any deductions or allowances to which you may be entitled and ensuring all payments are made on time.

Looking ahead

If you are affected you should review your systems now if you have not already, and prepare to make your first submission under the new MTD regime.

If you would like to understand how Making Tax Digital may affect you, or if you need support implementing a compliant digital process, our team is here to help.