Tax Planning
Using Making Tax Digital (MTD) for Income Tax: A Guide for Sole Traders & Landlords
Starting April 2026, sole traders and landlords with higher income must comply with MTD for Income Tax—know the thresholds, timelines and how to prepare.
By NomadicTax Research Team • 5-8 min read • March 12, 2026
## What Is MTD for Income Tax?
“Making Tax Digital for Income Tax” (MTD for IT) is HMRC’s initiative to modernise how sole traders and landlords record and report income. Under MTD, affected taxpayers must use compatible software to maintain records and send **quarterly summaries** of self-employment and property income & expenses. ([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/understanding-making-tax-digital-for-income-tax?utm_source=openai))
## Who Needs to Start When
| Tax Year | Qualifying Income Threshold | Must Start MTD from |
|---|-----------------------------|------------------------|
| 2024-25 | > £50,000 | 6 April 2026 ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai)) |
| 2025-26 | > £30,000 | 6 April 2027 ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai)) |
| 2026-27 | > £20,000 | 6 April 2028 ([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/understanding-making-tax-digital-for-income-tax?utm_source=openai)) |
Landlords and sole traders will be assessed based on **gross income before expenses**. It’s important to note: exemptions exist, e.g., due to digital exclusion. ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai))
## What You’ll Need to Do
- Choose compatible accounting software, ideally HMRC-approved.
- Keep digital records of income and expenses throughout the year.
- Submit **quarterly updates** instead of just one annual return.
- At year end, a final summary will be needed to confirm total income and calculate taxes due.
- If just above the threshold, plan for transition to avoid penalties. ([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/understanding-making-tax-digital-for-income-tax?utm_source=openai))
## Example Scenarios
- **Maria**, a landlord with rental income £55,000 per year: she must join MTD from 6 April 2026; she'll set up software, send four updates during the year, then file final summary.
- **Ben**, a sole trader earning £35,000: threshold crossed for tax year 2025-26; he has until 6 April 2027 to comply.
- **Claire**, earning £15,000 from property and self-employment: under threshold until 6 April 2028.
## Action Steps Now
1. Determine if your income from Self Employment + Property exceeded the relevant threshold in the last tax year.
2. Select and test compatible software.
3. If you use an agent, ensure they understand new reporting requirements.
4. Keep thorough, digital records from now so quarterly updates aren’t disruptive.
## Why MTD for IT Matters
- Promotes transparency, reduces errors.
- Helps HMRC collect timely data to handle tax obligations better.
- May change cash flow patterns—tax paid more regularly during the year.
- For many, ongoing compliance will require better documentation and digital workflows.
**Category:** Tax Planning
**Tax Home:** UK
**Read Time:** 5-8 min
**Published:** true