Making Tax Digital for Landlords, Sole Traders and Self-Employed Individuals

What is Making Tax Digital for Income Tax?

Making Tax Digital (MTD)  is a major change introduced by HMRC that will significantly impact sole traders and self-employed landlords who are running unincorporated property businesses and requires taxpayers to record income and expenses in HMRC compliant software.

From the 6 April 2026, where the MTD criteria has been met, you will need to submit quarterly returns to HMRC recording income and expenses received in each quarter.

When do the changes apply ?

HMRC are staggering the introduction of MTD for taxpayers for income tax and the changes will initially apply to the self-employed, sole traders and landlords who receive income from property who meet the following criteria:

• From 6 April 2026 – Those with turnover from self-employment and/or property of over £50,000 in the 2024/25 tax year

• From 6 April 2027 – Those with turnover from self-employment and/or property of over £30,000 in the 2025/26 tax year
• From 6 April 2028 – Those with turnover from self-employment and/or property of over £20,000 in the 2026/27 tax year

What do I need to do if I meet the criteria set out above ?

Once an individual is mandated to comply with the Making Tax Digital for Income Tax (MTD for IT) requirements, they will first need to register with HMRC for Making Tax Digital and will then need to use compatible software to:

• Record and retain details of each individual sale and business expense
• Submit quarterly summaries of your year-to-date income and expenses to HMRC
• Make accounting and tax adjustments and claim reliefs or allowances
• Finalise your end-of-year position and submit a digital tax return

How can you prepare for MTD for IT?

If you meet the criteria for being mandated into MTD for IT, now is the time to consider the following:

• Get your records in order
  Ensure your rental income and expenses are recorded regularly and accurately
• Move to digital accounting
  Switch to cloud-based bookkeeping software that meets HMRC requirements
• Understand quarterly reporting
  Quarterly submissions are new for many landlords and sole traders – missing deadlines could lead to penalties
• Seek specialist landlord and sole-trader advice
  Working with specialist tax advisors and accountants who understand property taxation can save time, stress and tax