From 6 April 2026, HMRC will introduce a significant change to how UK sole traders and landlords report their income. Under Making Tax Digital for Income Tax, individuals with qualifying income above £50,000 will no longer rely solely on an annual Self Assessment return. Instead, they will be required to keep digital records and submit updates throughout the tax year.
This change is part of HMRC’s long-term programme to modernise the UK tax system. While it does not alter how much tax you pay, it does change how and when income and expenses are reported. Understanding these requirements early is essential for compliance and smoother reporting.
This guide explains what is changing, who is affected, and how to prepare, based only on official HMRC and GOV.UK guidance.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax, also known as MTD for Income Tax Self Assessment, requires individuals to manage their tax records digitally and submit regular updates to HMRC using approved software.
Under MTD for Income Tax, you will need to:
- Keep digital records of income and expenses
- Use HMRC-compatible software
- Submit quarterly updates summarising income and expenses
- Submit a final declaration after the end of the tax year
Rather than sending all figures to HMRC once a year, MTD introduces ongoing digital reporting. This improves accuracy and reduces end-of-year pressure but requires a change in how records are maintained.
Importantly, Making Tax Digital does not change tax rates, allowances, or payment dates.
Who Must Comply from April 2026?
From the start of the 2026–27 tax year, Making Tax Digital for Income Tax will be introduced for:
- Sole traders
- Landlords
- Individuals with both self-employment and property income
You will be required to comply if your total qualifying income exceeds £50,000, based on your 2024–25 tax return.
What Counts as Qualifying Income?
HMRC defines qualifying income as gross income before expenses, including:
- Turnover from self-employment
- UK rental income
- Relevant overseas property income
If your qualifying income is below £50,000, you will not be required to join MTD in 2026, but future thresholds will bring more taxpayers into scope.
Future Rollout of Making Tax Digital
Making Tax Digital is being introduced step by step, rather than all at once:
- April 2026: qualifying income over £50,000
- April 2027: qualifying income over £30,000
- April 2028: qualifying income over £20,000
This phased approach means many landlords and sole traders who are currently unaffected will need to comply in the coming years.
What Will Change Under Making Tax Digital?
The most visible change is the move from annual reporting to quarterly updates.
Instead of submitting one Self Assessment return each year, affected individuals must:
- Maintain digital records throughout the year
- Submit quarterly summaries of income and expenses
- Finalise and confirm annual tax details after the end of the tax year
Quarterly updates are not tax calculations. They are summaries only and do not confirm the final tax liability.
Quarterly Reporting Deadlines
Each tax year is divided into four reporting periods. For the 2026–27 tax year:
- The opening MTD period is 6 April to 5 July 2026.
- It must be submitted by 7 August 2026
The same pattern continues every three months. Once MTD becomes mandatory, missed submissions may result in penalties under HMRC’s compliance framework.
Digital Record Keeping and Software Requirements
HMRC requires all MTD participants to maintain digital records using approved software.
Key points:
- HMRC does not provide free software
- Spreadsheets may be used only if linked to compatible bridging software
Choosing the right software depends on factors such as income sources, number of properties, and record complexity. Many individuals review their systems well before April 2026 to allow time for adjustment.
How Making Tax Digital Affects Landlords
For landlords, HMRC treats all UK rental income as one property business, even when multiple properties are owned.
Landlords must:
- Maintain digital records for rental income along with all eligible property related expenses
- Submit quarterly updates covering the entire property portfolio
Those who currently prepare figures once a year may need to shift to more frequent record updates to remain compliant.
Are Any Exemptions Available?
HMRC allows exemptions in limited circumstances. You may qualify if you are unable to use digital systems due to:
- Age
- Disability
- Health conditions
- Lack of reliable internet access
Exemptions must be applied for and approved by HMRC. They are not automatic.
Consequences of Not Complying
Once Making Tax Digital for Income Tax is mandatory, failure to comply may lead to:
- Late submission penalties
- Compliance notices
- Increased scrutiny of records
Taking steps early can help avoid errors and reduce the likelihood of compliance penalties.
What Sole Traders and Landlords Should Do Before April 2026
If you expect your qualifying income to exceed £50,000, preparation should begin well before April 2026.
Practical steps include:
- Reviewing your 2024–25 tax return to confirm qualifying income
- Assessing how records are currently kept
- Checking whether existing systems meet digital requirements
- Selecting HMRC-compatible software early
Early adoption allows time to test processes before quarterly submissions become compulsory.
Professional Support and Property Tax Guidance
Many individuals choose to work with making tax digital accountants or property tax advisors in the UK to manage the transition smoothly.
Brayan & Spencer Associates supports UK sole traders and landlords by helping them understand MTD requirements, implement compliant systems, and maintain accurate records. Their work focuses on clarity and compliance, particularly for property owners dealing with multiple income streams or complex reporting obligations.
Property owners seeking structured guidance may consult a Property Tax Accountant London or Property Tax Specialist London team member for support aligned with HMRC requirements.
📞 02071835956
🌐 www.bsassociate.co.uk
Key Takeaways
- Making Tax Digital for Income Tax becomes mandatory from April 2026
- Applies to sole traders and landlords with qualifying income over £50,000
- Requires digital records and quarterly updates
- Does not change tax amounts or payment dates
- Early preparation reduces compliance risk
Final Thoughts
Making Tax Digital for Income Tax represents one of the most significant changes to Self Assessment in recent years. While it introduces new reporting requirements, it also encourages better record keeping and improved accuracy.
For UK sole traders and landlords with qualifying income above £50,000, understanding the rules early and preparing ahead of April 2026 is the most effective way to stay compliant and avoid unnecessary pressure.
Frequently Asked Questions
Q: Do I still submit a tax return under Making Tax Digital?
Yes. You must submit a final declaration after the tax year to confirm income, allowances, and tax due.
Q: Does quarterly reporting mean paying tax four times a year?
No. Quarterly updates are summaries only and do not change payment dates.
Q: What if my income later drops below £50,000?
MTD entry is based on qualifying income from a previous tax year. HMRC guidance should be checked to confirm ongoing obligations.
Q: Can spreadsheets still be used?
Yes, but only if linked to HMRC-compatible software that submits data digitally.
Q: Are landlords with one property affected?
Yes. MTD applies based on income level, not the number of properties owned.
