Making Tax Digital for Income Tax is one of the most significant changes to the UK tax system in decades and it becomes mandatory from April 2026 for anyone earning over £50,000 from self-employment and property income.
This new system will replace the traditional once a year Self-Assessment with a fully digital approach to record keeping and reporting. Instead of a single annual return, affected taxpayers will need to submit quarterly updates and in some cases two sets of quarterly updates if they have both business and property income, along with a final end of year submission.
With HMRC tightening compliance checks, increasing documentation requirements, and placing much more emphasis on accurate digital records, now is the time to understand what’s changing and prepare your systems before the deadlines arrive.
What does this mean for sole traders and landlords
From 6 April 2026, MTD for Income Tax becomes mandatory for individuals whose gross income exceeds £50,000 (in the 2024/25 tax year).
If your total gross income passes £30,000 in 2025/26, expect the requirement to apply from April 2027 and a further drop to £20,000 is stated for April 2028, meaning most people will eventually fall under Making Tax Digital.
You must keep digital records of income and expenses. For each business, whether self-employment or rental, you will need to send a quarterly update. At the end of the tax year, a final, full digital tax return must be submitted taking into account all income sources.
Here’s how that works depending on your situation:
- If you’re a sole trader only: 4 quarterly updates + 1 final return = 5 submissions per year.
- If you have property only: 4 quarterly property income updates + 1 final return = 5 submissions per year.
- If you both trade AND rent out property: 2 separate sets of quarterly updates (one for business income, one for property) + the final combined return = 9 submissions per year.
Why are HMRC doing this?
The push behind MTD is for greater data, greater transparency, and fewer surprises for both taxpayers and HM Revenue & Customs.
Many sole traders and landlords are still unprepared. One recent survey showed that a significant number remain unaware of the upcoming changes, still rely on spreadsheets or paper, and underestimate the time required for digital record keeping.
HMRC will now expect full digital records, including income and expenses tracked through compatible software, casual bookkeeping (bank statements and spreadsheets) won’t be enough.
How can we help? We are fully MTD ready
As your accountant of choice, we’ve already taken steps to implement MTD compliant processes and software.
- We’ll set up software to manage your income and expenses digitally.
- Keep separate records for self-employment and property.
- Submit quarterly updates on your behalf.
- Handle the final year end return and adjustments, including other income types like PAYE, dividends, interest and capital gains etc.
It is a lot, but it also means no more scrambling at year end time and no surprise HMRC investigations and peace of mind that everything is done properly first time.
Act now – April 2026 isn’t far away
It may seem like plenty of time but once you think about the first quarter (April to June 2026), the first deadline (07 August 2026) and all the bookkeeping, it comes around fast. Getting organised now helps you avoid last minute panic and ensures you’re fully compliant from day one.
For those of you having to start this process in the first batch April 2026 to June 2026. We have already been in touch to let you know you are in the list. We are still very much around for you, if you need to ask any questions on what has been the biggest change sole traders have ever faced.
MTD for Income Tax will bring extra work and more regular filings. But the goal is clearer financial records, fewer tax surprises, and smoother compliance with HMRC.
With the right software, the right support and the right accountant, you can turn this change from a burden into an opportunity to get your finances in order once and for all.
Let’s get ready, April 2026 will be here before you know it.
