Compliance
Preparing for Making Tax Digital: What Sole Traders & Landlords Need to Know Before April 6, 2026
Over 860,000 UK sole traders and landlords with incomes above £50,000 need to prepare for the rollout of MTD for Income Tax—understand what changes are coming and how to comply from day one.
By NomadicTax Research Team • 5-8 min read • March 19, 2026
## What’s changing
From **6 April 2026**, **sole traders and landlords** in the UK whose income from self-employment or property exceeds **£50,000** in the **2024-25 tax year** must:
- Keep **digital records** using HMRC-recognised software. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
- Submit **light-touch quarterly updates** of income and expenses to HMRC. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
- File a full Self Assessment return by **31 January 2028** for the year 2026-27. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
## Penalties & Support
- A **points-based penalty system** will apply for late quarterly updates: a **£200 penalty** only when **four points** are accumulated. Occasional lapses won’t immediately lead to fines. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
- HMRC encourages those affected to **read the guidance, choose software early, and sign up** now. Agents should get involved where clients use them. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
## Practical Steps to Be Ready
1. **Assess if you're in scope.** If in 2024-25 you earned £50,000+, you're required; thresholds lower in coming years. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
2. **Choose recognized digital software.** Must meet HMRC’s functional-specs. Early adopters smartly test now.
3. **Organize your financial documents.** Get habits in place for quarterly reporting: invoices, receipts, expenses.
4. **Talk to your tax agent (if applicable).** They may need to update processes to submit updates on your behalf.
5. **Understand penalty structure.** Four late updates = penalty; better to miss an update than multiple without catch-ups.
## Why this matters
- **Spread out admin**: Quarterly updates avoid crunch time at year-end.
- **Time to adjust.** First year (2026-27) allows some cushion regarding penalties, helping with transition.
- **Digital discipline pays off**: more accurate records reduce mistakes, audits, or penalties.
## Case Example
Sarah is a landlord earning £60,000 a year from her properties. Under the old regime she only completed annual returns. As of **6 April 2026**, she must start sending her income/expenses every quarter using compatible software. If she misses two updates, she’ll earn points—getting to four points leads to a **£200 fine**. By organising now, Sarah avoids that risk.
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**Bottom line**: If you’re a sole trader or landlord with income above £50,000, you **must** act before 6 April 2026—pick software, set up processes, and stay informed.