EVERYTHING LANDLORDS AND SOLE TRADERS NEED TO KNOW TO STAY AHEAD
The government’s Making Tax Digital (MTD) initiative is transforming how UK taxpayers manage and report their finances. With major changes due in April 2026, it’s crucial to understand how the rules are evolving – especially if you’re a sole trader or landlord.
In this post, we break down what’s coming, who it affects, and what steps you can take now to stay compliant and confident.
A Quick Recap: What is Making Tax Digital?
Making Tax Digital is HMRC’s plan to modernise the tax system, moving it from annual paper returns to more frequent, digital submissions via approved software. It began with VAT and will soon extend to Income Tax Self Assessment (ITSA).
What’s Changing in 2026?
From 6th April 2026, the next phase of MTD for Income Tax kicks in. Here’s what to expect:
Who Is Affected:
- Sole traders and landlords
- With combined annual income over £50,000
Those earning between £30,000 and £50,000 will be brought in from April 2027.
New Reporting Requirements:
- Submit quarterly updates to HMRC via MTD-compatible software
- End-of-year finalisation replacing the current Self Assessment tax return
- Keep digital records of income and expenses
How Quarterly Updates Will Work
You’ll need to file an update every 3 months showing business income and expenses. No tax is calculated at this stage, these updates give HMRC a running view of your activity.
At the end of the tax year, you’ll submit a final declaration with any adjustments (e.g. capital allowances, accounting changes). This replaces the traditional annual Self Assessment return.
What Software Do I Need for MTD?
You’ll need HMRC-recognised software (such as Xero, FreeAgent, QuickBooks, etc.) that can:
- Record income and expenses digitally
- Submit quarterly updates and final declarations
- Link with your bank account for easier record-keeping
Spreadsheets alone won’t cut it anymore – you must use bridging software or switch to a compliant platform.
What You Should Do Now
Getting ahead of the 2026 rollout means fewer surprises and better business insights. Here’s how to prepare:
- Check your income threshold – If you earn over £50,000, the new rules apply from April 2026.
- Get set up on MTD-compatible software – We can help you choose the right one for your business.
- Start keeping digital records now – Even if you’re not yet required to, it’ll smooth the transition.
- Talk to your accountant – We’ll ensure you’re not just compliant, but confident and in control.
Need Help with MTD for Income Tax?
We’re already helping local businesses and landlords prepare for the next phase of MTD. If you’re unsure whether you’ll be affected, or how to stay compliant, we’re here to support you every step of the way.
Get in touch today for tailored advice and stress-free setup.
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