Compliance
UK’s Making Tax Digital Expands in 2026: What Sole Traders and Landlords Need to Prepare For
From April 2026 and onward, UK unincorporated businesses and landlords will face fresh digital record-keeping duties under Making Tax Digital thresholds. Preparation ahead is essential.
By NomadicTax Research Team • 5-8 min read • July 17, 2026
## MTD (Making Tax Digital) in 2026: New Thresholds & Obligations
Starting **6 April 2026**, individuals in the UK who are **sole traders or landlords** with “qualifying income” over **£50,000** from self-employment or property are required to use MTD-compatible software, keep digital records, and send quarterly updates. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/before-you-use-this-guide?utm_source=openai))
This will drop to **£30,000 threshold** in **April 2027** and further down to **£20,000** in **April 2028**. ([gov.uk](https://www.gov.uk/government/publications/update-notice-for-making-tax-digital-for-income-tax?utm_source=openai))
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## What This Means for Entity Setup & Compliance
Entities may be simple sole traders or businesses renting property. Even with one business line, if turnover crosses the threshold, digital tools are mandatory. Entities operating via partnership or company structure may see spillover obligations depending on income share.
**Software compatibility** is crucial — logs of income and expenses must be preserved digitally in compatible software. Agents representing clients must have proper access and authorisations.
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## Digital Nomads, Remote Property Income & Cross-Border Implications
### Remote property owners
If you rent property in the UK, that income counts. Even if abroad, it’s the UK property income when letting UK property. Keep in mind tax residence status may complicate liability.
### Digital nomads with UK clients
If you earn self-employment income and UK is your tax residence now or in future, the qualifying income threshold and record-keeping requirements will apply. Even partial UK rental or consulting income may drag you in.
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## Steps to Get Ready: Action Checklist
- Assess income level for 2024-25 tax year to see whether you’re over the £50,000 threshold. If close, plan ahead for software and record-keeping adjustments.
- Choose accounting software compatible with MTD: ensure it supports quarterly updates and aligns with HMRC’s compatibility criteria.
- Begin keeping digital records for all business and property income/expenses if not already. Keep receipts scanned, properly categorized.
- If using an agent, ensure they have registered with HMRC for digital agent services and linked to your records.
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## Compliance Risks & Pitfalls to Avoid
- Missing a quarterly update or failing to digitize records can lead to penalties. The thresholds don’t wait.
- Using incompatible software or failing to properly capture all income sources (property, partnership, self-employment) may get your submission rejected.
- Forgetting to unregister or notify HMRC when income sources cease — e.g. stop renting — may incur unnecessary obligations.
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The move to digital tax compliance in the UK is progressive and phased. By reviewing income, upgrading accounting systems, and adopting digital record-keeping now, sole traders, landlords, and remote professionals can stay ahead and avoid unwelcome penalties.