Tax Planning
Navigating Making Tax Digital: Action Plan for Sole Traders and Landlords
With MTD becoming law for many high-earning sole traders and landlords, navigating the transition is essential now rather than later.
By NomadicTax Research Team • 5-8 min read • September 5, 2026
## What is Making Tax Digital (MTD) for Income Tax?
MTD for Income Tax is a major reform requiring sole traders and landlords with **qualifying income over £50,000** to keep digital records, submit **quarterly updates**, and file annual returns using software compatible with HMRC standards. This began on **6 April 2026**, and from **September 2026** HMRC will proactively enroll those who haven’t signed up.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
## Who’s Affected & Key Deadlines
- If you’re a sole trader or landlord and your turnover from these activities (before expenses) exceeded £50,000 in the 2024-25 tax year: you are in scope from April 2026.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
- Quarterly updates are due by **7 August**, **7 November**, **7 February**, and **7 May** for the 2026-27 year. No penalties for late quarterly updates during this year; penalties kick in from **6 April 2027**.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
- The traditional Self Assessment return due by **31 January 2027** still applies for the 2025-26 tax year. MTD is gradually replacing the “send return once annually” model.([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/guidance-and-other-useful-information?utm_source=openai))
## Practical Tips & Actionable Advice
- **Choose recognised software** that supports MTD quarterly updates and annual returns. HMRC publishes a list of compatible software providers. Digits matter—find one with user-friendly features.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
- **Get organised now**, even if you're not yet required: maintaining digital records regularly helps avoid end-of-year scramble. For instance, tally property income and expenses monthly (internet, repairs, mortgage interest, etc.).
- **Watch thresholds and future expansion**: From April 2027 the threshold will drop to £30,000 for qualifying income. If you’re below £50,000 now, you may still enter scope next year. Plan accordingly.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
- **Consider exemptions** if applicable—those who are digitally excluded or meet other criteria might apply. But be sure you qualify.([gov.uk](https://www.gov.uk/government/news/436000-sole-traders-and-landlords-make-their-tax-digital?utm_source=openai))
## Example Scenario
Jane is a landlord whose rental gross income in 2024-25 was £60,000. She must now:
1. Sign up for MTD for Income Tax (if she hasn’t yet).
2. Use compatible software to keep digital records of rent, expenses, mortgage interest, repairs.
3. Submit quarterly updates by the deadlines above (starting with quarter ending July 5, submitted by August 7).
4. File her Self Assessment by 31 January following the tax year as usual.
If Jane misses her first quarterly update deadline in August 2026, there’s no penalty, but missing deadlines from April 2027 will lead to penalty points and fixed penalties.
## Why It Matters
- Improves cash flow and prevents large tax bills arriving without warning.
- Reduces error risk since HMRC gets up-to-date summaries rather than relying on year-end totals alone.
- Ensures you’re compliant and avoid unexpected sanctions once penalties apply.
**Summary**: If you’re a sole trader or landlord earning over £50,000 before expenses, make digital record-keeping and quarterly updates your new routine. Assess your software needs now—avoid urgency when deadlines loom.