Compliance
Mastering UK’s ‘Making Tax Digital’ Roll-out: What Sole Traders & Landlords Must Know
From April 2026 the UK is overhauling how sole traders and landlords report their income—this article breaks down what’s changed, what deadlines matter, and how to stay compliant without stress.
By NomadicTax Research Team • 5-8 min read • June 21, 2026
## What is **Making Tax Digital for Income Tax** (MTD-IT)?
From **6 April 2026**, some sole traders and landlords with qualifying income over **£50,000** must use approved software to:
- Create and store **digital records** of all self-employment and UK property income & expenses, before deductions. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai))
- Send **quarterly updates** summarising that income/expense information to HMRC. ([gov.uk](https://www.gov.uk/government/publications/update-notice-for-making-tax-digital-for-income-tax?utm_source=openai))
- Submit their **full tax return** via the same software, including all income, reliefs, gains etc., by **31 January** after the end of the tax year. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai))
## Who is required, and when does it extend?
The new rules will be phased in:
| Tax year | Qualifying income threshold | Must start using MTD-IT from |
|---|---|---|
| 2024–25 | > £50,000 | **6 April 2026** ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai)) |
| 2025–26 | > £30,000 | **6 April 2027** ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai)) |
| 2026–27 | > £20,000 | **6 April 2028** ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai)) |
Exemptions exist for those who are digitally excluded, have minimal income, or meet other HMRC criteria. ([gov.uk](https://www.gov.uk/guidance/check-when-to-sign-up-for-making-tax-digital-for-income-tax?utm_source=openai))
## What action every affected person should take now
1. **Check your qualifying income** from your most recent tax return—including gross self-employment and property before expenses. If you expect to cross the required threshold, plan for MTD-IT. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai))
2. **Select compatible software**—make sure it supports digital recordkeeping, quarterly updates and end-of-year submissions. Agent tools differ, so confirm agent-client workflows. ([gov.uk](https://www.gov.uk/guidance/using-making-tax-digital-for-income-tax?utm_source=openai))
3. **Sign up** ahead of the mandatory date—if required from April 2026 and you haven’t yet, you should already do so. If your start date is later, you can sign up voluntarily. ([gov.uk](https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax/?utm_source=openai))
4. **Build good routines**—keep digital records contemporaneously rather than waiting until deadlines; reconciled bank feeds, categorised expenses, clear audit trails all help prevent errors.
## Penalties & transitional reliefs
- For the first tax year of mandatory MTD-IT (2026–27), **no penalty points will be applied** for late quarterly updates, though returns or tax payments still carry existing penalties if late. ([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/understanding-making-tax-digital-for-income-tax?utm_source=openai))
- Starting April 2028, may be able to **opt out** if qualifying income remains under thresholds for **three consecutive years**. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/if-your-circumstances-change?utm_source=openai))
## Example scenarios
- Jane is a sole trader running a small online store, with gross income of £60,000 and rental income of £10,000. Since her gross income exceeds £50,000, from 6 April 2026 she must use MTD-IT. She needs to get software, build digital records, make her first quarterly update by early August 2026.
- Sam is a landlord with £25,000 property income and no self-employment. For 2026–27, the threshold is £50,000, so they are **not required** yet—but may need to in 2027–28.
## What this means for you
- More **ongoing recordkeeping** but fewer surprises at tax time.
- Greater compliance burden if you're unprepared, but also opportunities for better financial tracking and earlier tax estimates.
- If working with an agent/accountant, align on software choice and timing now—so the transition is smooth.
**Bottom line:** Don’t leave this to the last minute. If your income means you're caught in the 2026 phase, the time to act is now. Clean up records, choose software, sign up, and plan cash flow around your quarterly updates.