Making Tax Digital for Income Tax: what sole traders and landlords need to do
Making Tax Digital for Income Tax changes how many sole traders and landlords keep records, submit quarterly updates and finalise their tax position.
Making Tax Digital for Income Tax is being introduced in phases from 6 April 2026. HMRC guidance says the rules apply from 6 April 2026 where qualifying income from self-employment and property is over £50,000, with later phases for lower income thresholds. HMRC MTD Income Tax guidance.
Making Tax Digital for Income Tax: who is affected?
HMRC says affected taxpayers must use compatible software, keep digital records and send quarterly updates of income and expenses. HMRC has also stated that quarterly updates are not extra tax returns. HMRC sign-up guidance.
Why preparation matters
The main implementation issue is record discipline. A landlord with several properties or a sole trader with mixed personal and business bank activity may need new bookkeeping routines before the first quarterly update is due.
Practical preparation checklist
- Check qualifying income and the start date.
- Choose compatible software.
- Separate personal and business transactions.
- Agree bookkeeping responsibilities with your adviser.
- Build a quarterly review process for errors and missing records.
Penalties
HMRC has published penalty guidance for MTD Income Tax. The penalty point threshold is 4 points, and MTD Income Tax points are separate from VAT penalty points. HMRC MTD Income Tax penalty guidance.
Frequently asked questions
Clear answers to common questions on this topic.
When does Making Tax Digital for Income Tax start?
HMRC guidance states that Making Tax Digital for Income Tax becomes mandatory in phases from 6 April 2026.
Do quarterly updates replace the tax return?
No. HMRC describes quarterly updates as updates of income and expenses, not extra tax returns.
Do landlords need MTD software?
Affected landlords will need compatible software to keep digital records and send required updates.
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