Compliance
Compliance Essentials: Making Tax Digital (MTD) for Income Tax Starting April 2026
From 6 April 2026, many sole traders and landlords with gross income over £50,000 must begin keeping digital records and submitting quarterly updates under Making Tax Digital—failure to comply brings penalties.
By NomadicTax Research Team • 5-8 min read • May 8, 2026
## What is MTD for Income Tax?
Making Tax Digital for Income Tax is HMRC’s initiative to modernise how sole traders and landlords report their Income Tax and property income. Starting **6 April 2026**, those with gross self-employment or property income exceeding **£50,000** will move from annual returns to **digital record-keeping and quarterly updates**. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
## Who Is In Scope
- Individuals registered for **Self Assessment**. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
- Must have **qualifying income** (gross income from self-employment *and/or* property) over **£50,000**. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
- Landlords or sole traders under that threshold are exempt for now. Over time thresholds may lower in later years. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
## What You Need To Do to Comply
- Keep **digital records** using compatible software—not simple spreadsheets. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
- Send **quarterly updates** of income and expenses. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
- Submit full tax return and pay tax as usual by **31 January** following the end of the tax year. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
## Examples of Compliance Requirements
| Scenario | What’s Required |
|---|---|
| Sole trader running a small shop with £60,000 in self-employed income | Must keep digital records, make quarterly submissions for 2026/27. |
| Landlord renting out one property but rents + other income total under £50,000 | Not required under MTD until threshold changes in future years. |
| Mixed income (self-employment + property) over £50,000 | Combined income counts toward threshold. Must comply. |
## Why This Matters
- Penalties can apply for missed quarterly updates. Although stepped or test-phase leniency may apply, compliance is expected. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
- Encourages regular awareness of tax liabilities; fewer surprises at the year-end.
- Easier filing with digital records all year round.
## Action Steps for Affected Taxpayers
1. **Check your income**: Estimate combined self-employed + property gross income. Are you over £50,000?
2. **Choose suitable software**: Only certain platforms are fully compatible with HMRC’s MTD system.
3. **Set up regular bookkeeping**: Monthly or quarterly updates to avoid backlog.
4. **Budget cash flow for tax payments**: Quarterly reporting doesn't change deadlines for paying tax but highlights what’s due sooner.
5. **Seek guidance**: HMRC and professional advisors are releasing step-by-step directions—stay informed.
Complying from the start reduces risk—and with many overlapping changes in 2026/27, staying ahead with accounting and tax changes pays off.