Making Tax Digital for Income Tax: What Every Sole Trader and Landlord in the UK Should Know Before 6 April 2026

Are you a sole trader or landlord earning more than £50,000 from self-employment and property? A fundamental change to how you report income to HMRC takes effect this month and many people still are not ready.

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Are you a sole trader or landlord earning more than £50,000 from self-employment and property? A fundamental change to how you report income to HMRC takes effect this month, and many people still are not ready.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD for Income Tax) changes how sole traders and landlords keep records and report their income to HMRC. Rather than submitting a single annual Self Assessment tax return, those within scope must maintain digital records throughout the year and send regular updates to HMRC using compatible software.

From 6 April 2026, this is no longer optional for those above the income threshold. It is a legal requirement.

Are You in Scope? Understanding Qualifying Income

This is where many people trip up. HMRC calculates eligibility on gross income before expenses, not profit. That catches out landlords in particular, who may assume that modest net profits after mortgage costs, repairs and agent fees keep them outside the rules.

You need to use MTD for Income Tax from 6 April 2026 if your qualifying income exceeded £50,000 in the 2024/25 tax year. Qualifying income means gross income from self-employment and property combined, before any deductions.

Two practical examples worth knowing:

A landlord with £55,000 gross rental income is in scope even if their net profit after costs is modest, because HMRC looks at gross receipts, not what is left at the end.

A sole trader with £28,000 trading income and £25,000 rental income is also in scope, because the combined total of £53,000 exceeds the threshold. Many people do not realise the two sources are added together.

The rollout continues in phases beyond April 2026. From 6 April 2027, the threshold drops to £30,000 based on the 2025/26 tax year. From 6 April 2028, it drops further to £20,000 based on the 2026/27 tax year. If you are not in scope now, there is a good chance you will be within two years.

What MTD for Income Tax Requires You to Do

Digital record-keeping. You must maintain digital records of your income and expenses using software that is compatible with HMRC's MTD system. Paper records alone will not meet the legal requirements.

Quarterly updates. Every three months you send a summary of your income and expenses to HMRC through your software. These are not additional tax returns. HMRC describes them as light-touch summaries of your digital records. The four quarterly deadlines for the 2026/27 tax year are as follows:

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You can also opt to use calendar quarters ending on the last day of each calendar month if that suits your record-keeping better.

If you have both a sole trade and rental income, you must submit separate quarterly updates for each income source.

Final declaration. After your four quarterly updates, you submit a final declaration by 31 January 2028 for the 2026/27 tax year. This is the MTD equivalent of your Self Assessment return. Your software uses the information already recorded in your quarterly updates to populate it. Tax payment deadlines are unchanged: any balance due remains payable by 31 January as normal.

The New Penalty Regime

MTD for Income Tax introduces a points-based late submission penalty system. Each missed quarterly update or final declaration deadline earns one penalty point. For quarterly filers, once four points are accumulated a £200 financial penalty is charged, with a further £200 for each subsequent missed deadline.

One important distinction: the four-point threshold applies to quarterly updates. For the final declaration, the threshold before a £200 penalty is reached is two points. This is a detail worth being aware of.

For those joining in April 2026, HMRC has confirmed a soft landing for the first tax year. No penalty points will be issued for late quarterly updates during 2026/27. However, the soft landing does not cover the final declaration. A late final declaration will still attract a penalty point, and the 2026/27 final declaration is due by 31 January 2028.

This concession is expected to apply to the first cohort only. Those joining from April 2027 onwards should not assume the same treatment will apply.

Registration Is Not Automatic

HMRC will write to those it has identified as needing to register based on their 2024/25 Self Assessment return. Receiving that letter does not mean you are registered. You must actively sign up through HMRC's online service, or ask your accountant to do so on your behalf.

Not receiving a letter does not mean you are exempt either. It remains your responsibility to check whether you are in scope and to ensure you are signed up and prepared in time.

What If You Are Below the Threshold Now?

If your income currently sits below £50,000 but is likely to approach £30,000 in the coming years, it is worth transitioning to digital record-keeping sooner rather than later. The habits you build now will make the eventual move far smoother and reduce the risk of rushed compliance when lower thresholds arrive.

How Vision Consulting Can Help

Vision Consulting is a firm of Chartered Accountants and Registered Auditors based in London. Over 98% of our work comes through client referrals, and we have helped clients navigate every significant change to HMRC reporting over the years.

For MTD specifically, we can confirm whether you are in scope, register you with HMRC through our agent services account, help you choose and set up the right software, manage your quarterly updates on your behalf, and handle your final declaration at year-end.

If you are unsure whether MTD applies to your situation, or simply want to be certain everything is in order before the April deadline, get in touch with trusted adviors at Vision Consulting.

Call us on 020 8554 2135 or email info@visionconsulting.co.uk

Vision Consulting, Chartered Accountants and Registered Auditors. The Gherkin, 30 St Mary Axe, London EC3A 8EP.