Making Tax Digital (MTD) -Landlords and Sole Traders
- Brian Pusser
- 2 days ago
- 4 min read
If you earn income from self-employment or property, you need to prepare for Making Tax Digital (MTD) for Income Tax. This new system will become a legal requirement in stages starting from April 2026, depending on your turnover. Understanding what MTD means for you and how to get ready will help you avoid penalties and make tax reporting easier.
What is Making Tax Digital for Income Tax?
Making Tax Digital is a government initiative designed to modernize the tax system by requiring taxpayers to keep digital records and submit updates through compatible software. For Income Tax, this applies to individuals who receive income from self-employment or property.
The goal is to reduce errors, improve efficiency, and make tax management simpler. Instead of submitting a single annual tax return, you will send quarterly updates digitally, with a final declaration at the end of the tax year.
When Does MTD for Income Tax Apply?
The rollout of MTD for Income Tax depends on your turnover from self-employment or property income:
From 6 April 2026 if your turnover is over £50,000 in the 2024 to 2025 tax year
From 6 April 2027 if your turnover is over £30,000 in the 2025 to 2026 tax year
From 6 April 2028 if your turnover is over £20,000 in the 2026 to 2027 tax year
If your turnover is below these thresholds, you will not be required to join MTD for Income Tax at these dates, but you can choose to join voluntarily.
Who Needs to Comply?
MTD for Income Tax affects:
Sole traders with qualifying turnover
Landlords and joint property owners with qualifying rental income
Partnerships where at least one partner is self-employed or receives property income
If you use an accountant or bookkeeper, they can help you sign up and manage your digital submissions. If you don’t, you will need to handle the digital record keeping and submissions yourself.
Steps to Get Ready for MTD
1. Check Your Turnover
Calculate your turnover for the relevant tax year to see if you meet the thresholds. Include all income from self-employment and property.
2. Choose Compatible Software
You must use HMRC-recognized software to keep digital records and submit updates. This could be accounting software, spreadsheets with bridging software, or apps designed for MTD.
Look for software that suits your business size and complexity. Many providers offer free trials or demos.
3. Keep Digital Records
Start maintaining your income and expenses digitally. This means recording transactions in your chosen software regularly, not just at year-end.
4. Register for MTD
You or your agent must register for MTD for Income Tax with HMRC before the deadline. Registration opens about 12 weeks before your start date.
5. Submit Quarterly Updates
Instead of one annual return, you will send updates every three months. These updates include income and expenses for the period.
6. Final Declaration
At the end of the tax year, submit a final declaration confirming your income and expenses for the whole year.
How Landlords Can Prepare
Landlords and joint property owners must also follow MTD rules if their rental income exceeds the thresholds. Here are some tips:
Use property management software that supports MTD
Keep digital records of rent received, expenses, and repairs
Understand allowable expenses to reduce taxable income
Consider appointing an agent to help with digital submissions
Preparing Without an Accountant or Bookkeeper
If you manage your finances alone, these steps will help:
Attend webinars designed for sole traders and landlords to understand MTD requirements
Watch short videos on how to sign up and use software
Plan your record keeping and software use ahead of deadlines
Use simple, user-friendly software designed for non-accountants
Keep all receipts and invoices digitally or scanned
Benefits of Using MTD
While MTD requires some adjustment, it offers benefits:
Reduced errors through digital record keeping
Easier tracking of income and expenses throughout the year
Faster submission process with quarterly updates
Better financial visibility to plan your business or property income
Potential to spot tax-saving opportunities earlier
Common Questions About MTD
What if I miss the registration deadline?
You could face penalties and interest on late payments. It’s important to register on time.
Can I use spreadsheets?
Yes, but only if you use bridging software that connects your spreadsheets to HMRC digitally.
What if my turnover changes?
You must monitor your turnover each year. If you cross the threshold, you must join MTD from the next April.
Can I still use an accountant?
Yes, you can authorize your accountant or agent to manage your MTD submissions.
If you receive income from self-employment or property, now is the time to check when Making Tax Digital for Income Tax will apply to you.
The rules are being introduced in stages from 6 April 2026, and you may need to keep digital records, use compatible software and submit updates to HMRC during the year.
Get More Help From BR Pusser & Co Ltd
At B R Pusser & Co Ltd, we can help you understand whether you are affected, review your income thresholds, choose suitable software and prepare your records before the deadlines arrive.
Need help getting ready for Making Tax Digital?
Speak to our team today for practical advice tailored to your business or property income.
