Compliance
Navigating Making Tax Digital for Income Tax: What Self-Employed and Landlords Need to Know
The MTD rollout for self-assessment has entered a critical phase: understand who’s in scope, what’s changing, and how to stay compliant while leveraging digital tools.
By NomadicTax Research Team • 5-8 min read • September 9, 2026
## What is MTD for Income Tax (IT)
From **6 April 2026**, sole traders and landlords in the UK whose **qualifying income** (from self-employment and property combined) exceeds **£50,000** must use software compatible with Making Tax Digital for Income Tax. They must keep digital records, send **quarterly updates**, and file an annual return digitally. And from **September 2026**, HMRC will begin signing up those who haven’t yet enrolled. ([gov.uk](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax?utm_source=openai))
### Who’s In/Out of Scope
- **Included**: individuals with both self-employment and/or property income, totals > £50,000 per tax year.
- **Exemptions**: minister of religion, Lloyd’s underwriters, people where digital use is unreasonable. Also, those below the thresholds. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
### What You’ll Need to Do
1. Choose and install **HMRC-approved software** (for records, updates, and returns).
2. Record income and expenses digitally throughout the year— don’t wait until year-end.
3. Send **quarterly updates** aligned with calendar quarters.
4. File your annual Self Assessment return as usual, but through the digital channel using software.
5. Keep receipts and evidence stored digitally. Manual corrections must be made via software. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
### Practical Example
Sarah, a self-employed consultant who also rents out a two-bedroom flat, had self-employment income of £40,000 and property income of £15,000 in 2025-26 (total £55,000). She must comply from 6 April 2026: use software, make quarterly submissions (e.g. data up to 5 July, 5 Oct, 5 Jan, 5 April), and file her full return digitally. If she misses quarterly update deadlines, HMRC may issue penalty points or charges once mandation is in full force.
### Tips to Stay Ahead
- Start using software **now** even if not required; familiarisation avoids last-minute issues.
- Check whether your accountant/agent is MTD-compatible.
- Review expenses categories to ensure accuracy.
- Plan cash flow since quarterly updates will show tax liability earlier.
- Use allowances and reliefs proactively (e.g. property allowances, trading allowances) to reduce what’s taxable.
**Impact Summary**
This change shifts from annual to quarterly visibility, increasing admin but improving real-time tax tracking. It's a high-impact reform, with software choices, record-keeping practices, and cash flow now front and centre for taxpayer planning in this bracket.