The Making Tax Digital (MTD) for Income Tax countdown has begun and landlords and sole traders who aren’t prepared could face costly consequences.
Starting 6 April 2026, sole traders, landlords and self-employed individuals with a qualifying income above £50,000 will need to comply with MTD.
The threshold will decrease to £30,000 in the following year and by April 2028, it will drop again to £20,000.
With the first phase nearly upon us, landlords and sole traders must take action now to update their systems and stay compliant.
How will MTD affect sole traders and landlords?
Under MTD, the traditional annual Self-Assessment tax return will be replaced by a new system of digital record-keeping, requiring four quarterly submissions during the tax year, plus a final digital declaration after year-end.
For sole traders, MTD means moving away from paper records and spreadsheets to fully digital accounting. Income and expenses will need to be submitted quarterly to HMRC.
Landlords will face similar changes, with those earning UK or overseas rental income needing to submit quarterly updates for property income.
Landlords with multiple properties may see their financial obligations increase, so setting up HMRC-compliant systems for recording and reporting is essential.
How to prepare for MTD
The first step in preparing for MTD is assessing your qualifying income. Reviewing your most recent tax return will help you determine your financial position and the phase at which you must comply.
Next, you’ll need to move to MTD-compliant software or use some bridging method that is compliant with HMRC, as all submissions must be made digitally.
Many accounting platforms are designed to simplify record-keeping and quarterly reporting, making it easier to stay on top of compliance.
Sole traders and landlords must begin transitioning from paper records and basic spreadsheets to digital records well in advance of their mandatory deadline.
Why early preparation matters
MTD marks a shift towards real-time tax compliance and waiting until the first phase is implemented could leave you facing unexpected penalties.
Our professional team can help ease the administrative burden by preparing and submitting quarterly updates on your behalf.
Staying informed about MTD and understanding your obligations can help reduce the risk of errors when the changes take effect.
To get ready for MTD for Income Tax or for further advice, please contact our team today.