The countdown to Making Tax Digital (MTD) for Income Tax Self-Assessment is on, with landlords, sole traders, and self-employed individuals earning qualifying income over £50,000 required to comply from 6 April 2026.
In the following year, the qualifying income threshold drops to £30,000, followed in April 2028 with a qualifying income threshold of £20,000.
With the first phase fast approaching, landlords and sole traders must act now and update their systems to stay compliant.
Under MTD, the traditional annual Self-Assessment tax return will be replaced with four quarterly submissions during the tax year and a final digital declaration after the year-end.
MTD represents a move away from paper-based records towards maintaining accounting records in a digital format, which can include the use of spreadsheets and compatible accounting software.
Sole traders and landlords with UK or overseas rental income will need to digitally record their income and expenses, and submit a summary of these each quarter to HMRC.
Landlords with multiple properties may find that their financial obligations are increasing, so ensuring that HMRC-compliant recording and reporting systems are in place ahead of the implementation date is crucial.
Preparation for MTD starts with assessing your qualifying income. Reviewing your most recent tax return can help you to determine your financial position and this should be done promptly if you are not already aware of your obligations.
The next step is moving to MTD-compliant software, if you have not already done so, as submissions must be made digitally.
Many accounting platforms are designed to simplify record-keeping and quarterly reporting, not only making it easier to stay compliant, but also streamlining your finances in the long term.
MTD is bringing significant reform to tax filing, with a shift towards real-time financial management, and staying informed is essential if you are to understand your responsibilities, reduce errors, and avoid unexpected penalties.
Our professional team can help you to understand what MTD ITSA means for you, to choose and implement the right software for your needs, and to prepare and submit accurate quarterly updates. To get ready for MTD for Income Tax, speak to our team today.