HMRC has confirmed that Making Tax Digital (MTD) for Income Tax will become mandatory from 6 April 2026 for sole traders and landlords with annual business or property income over £50,000. From 6 April 2027, the threshold will be reduced to £30,000.
Who Is Affected and When?
- From 6 April 2026: Sole traders and landlords with gross income over £50,000. If an individual has both self-employment and rental income, the threshold applies to the total gross turnover from both sources.
- From 6 April 2027: Sole traders and landlords with gross income over £30,000.
- Exemptions: If you’re a non-resident landlord or if you already file annual partnership returns under MTD, special rules may apply and you should seek tailored advice.
What Does MTD for Income Tax Require?
- Digital Record Keeping: You must keep your business and rental records in compatible digital software (spreadsheets alone will not suffice).
- Quarterly Updates: Submit a quarterly summary of income and expenses to HMRC via your software.
- End of Year Declaration: Confirm your final figures for the tax year in a Single Declaration.
Why You Should Start Preparing Now
- Avoid Penalties: Non-compliance can lead to fines and interest charges.
- Smoothed Cash Flow: Quarterly submissions help you track liabilities throughout the year.
- Fewer Year End Surprises: Regular updates mean no last-minute scramble to gather paperwork.
Next Steps for Sole Traders and Landlords
- Review Your 2025/26 Income: Check if you’ll exceed the £50,000 threshold.
- Select Digital Software: Look for MTD accreditation and features that suit your record keeping needs.
- Plan Quarterly Routines: Build time into your schedule for quarterly updates and reconciliations.
- Seek Expert Support: Talk to us about training, onboarding, and ongoing compliance checks.
How Plus Accounting Can Help
- Software Selection and Onboarding: We’ll guide you through choosing and setting up MTD compliant software.
- Quarterly Reporting: Take the headache out of submissions with our managed quarterly update service.
- Year End Review: We’ll prepare your final declaration and ensure you’ve claimed every allowable expense.
Contact us today to start your MTD journey and stay ahead of HMRC’s new requirements.
Author: Michelle Baldwin, Personal Tax Manager, Plus Accounting
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
Date published: 12 May 2025