The Making Tax Digital (MTD) for Income Tax countdown is on and landlords and sole traders who are not prepared may face costly repercussions.
From 6 April 2026, sole traders, landlords and self-employed individuals with a qualifying income over £50,000 will be required to comply with MTD.
In the following year, the qualifying income threshold drops to £30,000, followed in April 2028 with a qualifying income threshold of £20,000.
With the first phase fast approaching, landlords and sole traders must act now and update their systems to stay compliant.
How will MTD affect sole traders and landlords?
Under MTD, the traditional annual Self-Assessment tax return will be replaced with a new system of digital record-keeping, four quarterly submissions during the tax year and a final digital declaration after the year-end.
For sole traders, MTD is a move away from paper records and spreadsheets towards fully digital accounting, so income and expenses will need to be submitted quarterly to HMRC.
Landlords will face similar changes and those with UK or overseas rental income will also need to submit quarterly updates for property income.
Landlords with multiple properties may find that their financial obligations are increasing, so preparing HMRC-compliant recording and reporting systems is crucial.
How to prepare for MTD?
Preparation for MTD starts with assessing your qualifying income.
Reviewing your most recent tax return can help determine your financial position and this should be done immediately.
The next step is moving to MTD-compliant software, as submissions must be made digitally.
Many accounting platforms are designed to simplify record-keeping and quarterly reporting, making it easier to stay compliant.
Sole traders and landlords must start the transition and move away from paper records and basic spreadsheets to keep digital records before it becomes mandatory.
Why early preparation matters
MTD is a move towards real-time financial management and waiting for the first phase to be implemented could leave you facing an unexpected penalty.
Our professional team can take some of the administrative burden off you and prepare and submit quarterly updates on your behalf.
MTD is bringing significant reform to tax filing and staying informed can give you a better understanding of your requirements, reducing the risk of any last-minute errors.
To get ready for MTD for Income Tax, speak to our team today.
