What Is Changing Under MTD for Income Tax
From 6 April 2026, sole traders and landlords in the UK with qualifying income over £50,000 will be required to:
- Keep digital records using MTD-compatible software for all income and allowable expenses. (gov.uk)
- Send quarterly summary updates to HM Revenue & Customs (HMRC). (gov.uk)
- Eventually continue to submit a full Self Assessment tax return by 31 January following the tax year end. (gov.uk)
Practical Steps to Comply
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Determine Scope Check whether your combined income from self-employment and property exceeds £50,000. If yes, you must comply from 6 April 2026. If not, you may opt in voluntarily. (gov.uk)
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Choose Suitable Software Use HMRC-approved or open-source software that supports Making Tax Digital (MTD) for Income Tax. Ensure it allows quarterly updates, multiple income streams and expenses tracking.
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Set Up Record-keeping Systems Now Even before the deadline, begin recording detailed expenses, income (including partnerships), and other sources. If you have income from student loans or postgraduate loans, details will need inclusion. (gov.uk)
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Understand Deadlines and Update Periods Updates will be quarterly; make sure you know when each update period ends and when the relevant filing deadlines fall. HMRC has amended guidance clarifying update periods over tax year coverage. (gov.uk)
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Watch Penalties and Early Exposure Although penalties may be moderated in early periods, being late or inaccurate could put you at risk. Ensure correct income source reporting including for partnership profits, since partner’s share over partnerships is treated as other income under MTD. (gov.uk)
Example Scenario
Sarah is a landlord with rental profits of £30,000 and self-employment profits of £25,000 per year. Total qualifying income is £55,000. From 6 April 2026 she must:
- Use digital software to record both sets of income and related expenses (repairs, maintenance, letting agency fees etc.)
- Submit quarterly summaries (e.g. first update covers 6 April to 5 July)
- Include any student loan deductions or postgraduate loan thresholds interactions only in later parts.
Failing to submit quarterly updates could trigger compliance actions, though during first year HMRC may take a more lenient approach. For those with partnership income, remember your individual share must be included in your updates and tax return.
Key Tips to Reduce Stress
- Automate expense capture using tools or apps tied to bank accounts
- Review allowable expense categories for landlords vs tradespeople to avoid disallowed costs
- Keep clear records of finance costs on property income, especially with the new separate property income rates coming in later years under Budget 2025. (gov.uk)