Compliance
Getting Ahead of Making Tax Digital: Practical Steps for UK Landlords and Sole Traders
As Making Tax Digital for Income Tax rolls out for higher-earning landlords and sole traders from 6 April 2026, now is the time to organise your records, choose compatible software and avoid penalties.
By NomadicTax Research Team • 5-8 min read • September 8, 2026
## What is Making Tax Digital for Income Tax?
From 6 April 2026, sole traders and landlords with qualifying income over **£50,000** in the 2024-25 tax year (who are not exempt) must use digital software to keep records and send **quarterly updates** instead of just annual returns. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
## Key deadlines & who is affected
- If your income (self-employment + UK and overseas property) exceeded £50,000 in 2024-25, HMRC will sign you up automatically during 2026. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
- Quarterly updates summary: totals of income & expenses every 3 months; not full tax returns. Still need to submit full Self Assessment and pay by **31 January** after tax year ends. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
- Digital record keeping must begin for all existing self-employment or property income; and add in any new income sources (UK or overseas). Ceasing sources also must be reported. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
## Preparing now: Actionable advice
1. **Audit your current income sources** – include overseas property, UK property, self-employment. List all that need to be reported.
2. **Choose compliant software** – make sure it supports Create & Store digital records, quarterly updates, adding/removing income sources. Confirm their accounting periods match HMRC rules. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
3. **Set up digital records immediately** – even before you’re 'signed up'; catch up on any missing records from the start of the tax year. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
4. **Understand penalties** – for missing quarterly updates, late full returns, etc. Note: for 2026-27, penalty points for missed quarterly updates may be eased, but full return deadline abuse will still trigger penalties. ([gov.uk](https://www.gov.uk/guidance/check-what-to-do-if-hmrc-has-signed-you-up-for-making-tax-digital-for-income-tax?utm_source=openai))
## Example Scenario
Sarah lets a UK flat and has a small cottage overseas; combined income from both plus self-employment raised over £55,000 in 2024-25. From 6 April 2026 she needs:
- Digital software keeping separate records for UK property business and foreign property business
- Quarterly updates in software summarising income/expenses every three months
- Full Self Assessment including any other income streams by 31 January 2027
Failing to add overseas cottage income would lead to inaccurate estimates and possible penalties.
## Tips to stay compliant and stress-free
- Keep receipts, bank statements and record expenses in real-time (don’t wait until end of year).
- Use software that supports multi-currency if overseas income is involved.
- If your income dropped below threshold or you cease business, inform HMRC promptly.
- Engage a tax agent or advisor if you have multiple income sources or complex tax residency issues.
Working proactively will help landlords and sole traders avoid surprises with Making Tax Digital and ensure you’re compliant as changes take effect.