If you’re a sole trader or landlord, there’s a tax change that you simply can’t ignore.
Making Tax Digital (MTD) for Income Tax started on 6 April 2026, changing how self employed people and landlords report their income to HM Revenue & Customs.
In a nutshell, the once-a-year tax return routine is being upgraded. Yes, that means more admin.
MTD is being rolled out in stages:
- April 2026 – if your self-employed and/or rental income exceeds £50,000
- April 2027 – threshold drops to £30,000
- April 2028 – anyone earning over £20,000 joins
It’s important to note that your involvement is based on your qualifying income, not profit. This means that if you have high costs impacting your profit, you could still fall into the first group if your gross income passes the threshold.
What you need to do for MTD
If/when MTD applies to you, you’ll need to:
- Keep digital records
- Use MTD-compatible software
- Send quarterly updates to HMRC
- Submit a final declaration at year-end
That means HMRC hears from you four times a year instead of once.
How you need to submit MTD details
MTD only works with approved accounting software.
That software keeps your digital records (you need to keep your transactions up to date) and sends updates directly to HMRC.
If your bookkeeping system currently involves a spreadsheet and a pile of receipts, it’s time for an upgrade. The days of 
shoeboxes of receipts or standalone files are gone.
‘It can feel a bit overwhelming as you set up the systems needed for MTD,’ explains Ugne, Semi-Senior Accountant with re:accounts Chartered Accountants in Stevenage. ‘However, once everything is digital, you should have a much clearer picture of how your business or rental income is performing throughout the year. It’s actually a great opportunity to monitor changes and maximise potential. ’
What happens now
HMRC will use your 2024–25 tax return to decide if/when you need to comply with MTD for Income Tax. However, if 
your qualifying income exceeds the threshold, you need to join MTD even if HMRC has not contacted you.
Now is the time to start getting your records organised and digital now. Then, your transition to MTD will be far easier.
If your qualifying income is over £50,000, your first quarterly MTD return (for the period 6 April to 5 July) is due by 7 August 2026.
Don’t wait until HMRC tells you it’s too late.
Making Tax Digital will change how sole traders and landlords report income. Getting the right systems in place now saves a lot of stress later.
Are you a landlord or sole trader?
Are you impacted by MTD for Income Tax?
If you’d like help getting ready, speak to our team and we’ll point you in the right direction.
