Compliance
Getting Ready for Making Tax Digital: Compliance Essentials for Self-Employed and Landlords
With Making Tax Digital (MTD) for Income Tax coming into force April 2026 for many self-employed and landlords, this guide helps you comply smoothly and avoid common pitfalls.
By NomadicTax Research Team • 5-8 min read • March 25, 2026
## What is MTD for Income Tax and Key Dates
Making Tax Digital for Income Tax is a major compliance reform. From **6 April 2026**, **sole traders and landlords** with **qualifying income over £50,000** must:
- Keep **digital records**;
- Use **MTD-compatible software**;
- Submit **quarterly summaries** of income & expenses to HMRC. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
For those whose qualifying income is over £30,000, MTD becomes compulsory from **April 2027**, and for over £20,000 from **April 2028**. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
## What Counts as Qualifying Income
Qualifying income includes gross income (before any deductions or allowances) from self-employment *and* property rental business. If you fall above the thresholds, even if much of your income is via property, you’ll be caught. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
## Actionable Compliance Steps
**1. Select software early:** Choose digital accounting software approved by HMRC, capable of quarterly submissions. Give yourself time to test it. Many existing MTD for VAT users have suitable tools.
**2. Digital record-keeping:** Maintain receipts, bank statements, invoices & expense logs digitally. Keep up-to-date throughout tax year.
**3. Join the testing programme:** HMRC encourages eligible users to sign up early to become familiar without penalties. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
**4. Prepare for changeover:** Align your financial systems now to produce quarterly summaries; avoid leaving all income and expenses until year end.
**5. Understand grace periods & support:** Initially, HMRC won’t impose late penalties during the testing phase. Also, there are customer support teams. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
## Common Mistakes to Avoid
- Underestimating record-keeping: mixing personal and business expenses without clear separation.
- Missing threshold changes: move above qualifying income and don’t realise you’re in scope.
- Late software adoption: using inadequate or incompatible software at the last minute.
- Ignoring property income: many landlords may not think MTD applies due to rental income, but it does count if gross income threshold exceeded.
## Example Scenarios
- *Self-employed Sara* has £60,000 in gross income split between consultancy and two small rental properties. From April 2026, she must keep digital records, use software, and send quarterly updates.
- *Landlord Tim* whose rental income is £40,000 but no self-employment: he only comes under MTD in April 2027 when threshold drops to £30,000. Meanwhile, he should still prepare systems now.
## Why This Matters
- Enhanced transparency helps avoid **under-reporting** and **penalties**.
- Quarterly reporting offers better cash flow management—less shock at year-end liability.
- Early compliance avoids last-minute scramble and risk of non-compliance.
Beyond compliance, MTD aligns with broader HMRC goals: reducing the tax gap, simplifying taxpayer experience, modernising services. Be ready. Be organised. This transition is inevitable—and early action pays dividends.