Compliance
Meeting Compliance Requirements: Getting Ready for Making Tax Digital (MTD) for Income Tax
Everything unincorporated businesses & landlords need to do from April 2026 to comply with digital record-keeping and quarterly reporting requirements under MTD.
By NomadicTax Research Team • 5-8 min read • April 27, 2026
## What Is MTD for Income Tax?
Making Tax Digital (MTD) for Income Tax is a major administrative reform requiring eligible sole traders and landlords to keep **digital records** and submit tax updates **quarterly**, rather than once a year.([gov.uk](https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital?module=inline&pgtype=article&utm_source=openai)) It’s intended to increase accuracy, make tax easier, and improve cash flow visibility.
## Who Must Comply and When
| Threshold | Compliance Start Date |
|---|---|
| Qualifying income from self-employment/property over **£50,000/year** | **6 April 2026** ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital?module=inline&pgtype=article&utm_source=openai)) |
| Over **£30,000/year** | From **April 2027** ([gov.uk](https://www.gov.uk/government/publications/digital-record-keeping-notice-for-making-tax-digital-for-income-tax?utm_source=openai)) |
| Over **£20,000/year** | From **April 2028** ([gov.uk](https://www.gov.uk/government/publications/digital-record-keeping-notice-for-making-tax-digital-for-income-tax?utm_source=openai)) |
Qualifying income includes gross receipts from self-employment and property before deducting expenses.([gov.uk](https://www.gov.uk/government/publications/digital-record-keeping-notice-for-making-tax-digital-for-income-tax?utm_source=openai))
## What You’ll Need to Do — Step by Step
1. **Update your software**: Use MTD-compatible tools for accounting, records, and submission.
2. **Create digital records**: From 6 April 2026 (or earlier if your accounting period ends on 31 March) — record income, expenses, dates, categories.([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/before-you-use-this-guide?utm_source=openai))
3. **Send quarterly updates**: By set deadlines (e.g. first update by 7 August 2026 for standard periods).([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/before-you-use-this-guide?utm_source=openai))
4. **Submit final declaration**: End-of-year tax return via compatible software by 31 January following the tax year.
5. **Check for exemptions or deferrals**: Certain groups (e.g. non-UK resident entertainers, ministers of religion etc.) may be exempt or deferred.([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-and-penalty-reform?utm_source=openai))
## Penalties and Compliance Risks
A **points-based penalty system** will be introduced. If you miss a quarterly or annual obligation, you'll get a point. Accumulate too many points, and financial penalties follow.([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
Risk areas include:
- Poor record-keeping or using non-approved software.
- Missing deadlines for quarterly updates.
- Failing to understand qualifying income, especially where multiple income sources exist.
## Example
Bob is a landlord who earns £60,000 gross property income per year. From April 2026, Bob must use digital records, submit quarterly summaries, and file his tax return via compatible software. If he misses a quarterly update by the deadline, he gets a penalty point; miss another, he may receive a financial penalty. To avoid this, Bob ensures he uses reliable software, sets reminders, and keeps accurate records as his business earns above the threshold.
## Key Takeaways for Businesses & Landlords
- Check whether you exceed the threshold now or expect to next year.
- Invest now in compatible record-keeping software, training, or advisory support.
- Plan cash flow around quarterly updates rather than relying entirely on the annual return.
- Keep all of your existing invoices, receipts and expense details digitised from the start of the new period.
## Impact of Frozen Thresholds
Because thresholds are being held steady until **April 2031**, what counts as being “in a certain band” won’t change even as inflation pushes incomes higher. That tends to pull more income into higher taxed categories over time — justifying greater care in planning.([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai))