Compliance
Compliance Corner: Quarterly Digital Records Under UK Making Tax Digital (MTD)
The UK’s Making Tax Digital for Income Tax (MTD ITSA) brings mandatory quarterly updates for many sole traders and landlords—here’s what you need to know to stay ahead.
By NomadicTax Research Team • 5-8 min read • April 15, 2026
## What Is MTD for Income Tax?
HMRC is Rolling Out **Making Tax Digital for Income Tax Self Assessment (MTD ITSA)**. From **6 April 2026**, **sole traders and landlords** in England, Wales, or Northern Ireland with **gross self-employment or property income over £50,000** will need to keep digital records and send **quarterly returns**. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-126/issue-126-of-agent-update?utm_source=openai)) Those with **gross income above £30,000** will follow in **April 2027**, and the threshold may later fall to £20,000. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-126/issue-126-of-agent-update?utm_source=openai))
## Why This Change Is Significant
- This signals a move towards **real-time tax visibility** and reduces “catch-up” pressures at annual filing.
- Increased digital record-keeping increases audit-readiness.
- Use of compatible software becomes mandatory, so software providers must support the necessary data flows.
## What Sole Traders & Landlords Must Do
1. **Adopt compliant software** – Keeping income & expenses digitally, with ready tools for quarterly updates.
2. **Understand timing** – Quarter-end updates every 3 months; first deadline likely very soon after start in April.
3. **Maintain accurate records** – Including allowable expenses, property income details, split costs, etc.
4. **Prepare for penalties** – Missing or late quarterly updates can lead to penalties once in force.
## Actionable Example
*Amy is a UK landlord with two rental properties. In her first MTD year (April-June 2026), she must:
- keep digital records of all rental income and property expenses using compatible software;
- compute quarterly gross rental income and expenses; send the first quarterly update by early July;
- watch for allowable property allowances and deductions (e.g. maintenance, insurance);
- annually reconcile quarterly data with full self-assessment declaration.*
## Tips to Ensure Compliance
- **Invest early in software**: Many platforms specialize in UK MTD compliance—look for integrations with HMRC API.
- **Use bots or alerts** to track deadline reminders.
- **Train staff or agents** to understand what qualifies as expense vs capital cost.
- **Keep personal and business expenses separate if landlord and self-employed**.
Compliance with MTD lifts reporting burden in the long run, but early adopters will need to stay disciplined. If you're approaching the threshold, better to build systems now than scramble later.