Making Tax Digital for Income Tax: What Landlords and the Self-Employed Need to Know

Making Tax Digital is designed to improve the accuracy, efficiency, and accessibility of the UK’s tax system. Rather than submitting an annual Self-Assessment return, taxpayers will be required to keep digital records and provide HMRC with quarterly updates via MTD-compliant software. 

 

These updates follow specific quarterly periods, as outlined below: 

You have the option to align your reporting periods with the standard calendar quarters. This election will remain in place unless formally withdrawn. It's important to note that even with the calendar quarter election, the filing deadlines do not change. 

 

In addition to the quarterly updates, a final declaration must be filed by 31 January following the end of the tax year. The final declaration includes other taxable income (e.g. savings, investments) and confirms your overall tax position for the year which replaces the current self assessment submission. 

 

This shift is intended to reduce avoidable mistakes, provide HMRC with more up-to-date information throughout the tax year, and give taxpayers better visibility of their financial position in real time. For many, it will mean adopting new tools and technologies to ensure their record-keeping meets the required standards. 

 

 

MTD has already been implemented for all VAT-registered businesses, regardless of turnover. This means that whether you are over or under the VAT threshold, you are now expected to comply with MTD for VAT. 

 

The next significant milestone comes in April 2026, when MTD will be extended to cover landlords and self-employed individuals earning over £50,000 annually through property or business income. In April 2027, this threshold will drop to include those earning more than £30,000, with a further reduction to £20,000 taking effect from April 2028, as confirmed in the most recent Spring Statement. 

 

This phased approach gives individuals and smaller businesses time to prepare - but the message is clear: MTD is coming for everyone. 

 

 

While Making Tax Digital may initially appear as an added administrative burden, it offers a number of real benefits - particularly for those who embrace digital transformation early. For landlords, sole traders, and small business owners, MTD offers an opportunity to overhaul inefficient bookkeeping practices, improve financial clarity, and avoid costly errors. 

 

Digital records eliminate the need to manually enter data from paper receipts or spreadsheets, and they can help prevent missed income, inaccurate claims, or calculation mistakes. Meanwhile, the move to quarterly submissions encourages better cash flow planning and can reduce the surprise of year-end tax bills. 

 

Ultimately, MTD offers the chance to shift away from reactive financial management and move towards a more proactive, transparent approach. 

 

 

To become MTD-ready, individuals must first ensure they are using approved accounting software that integrates with HMRC’s systems. Tools such as Xero, QuickBooks, FreeAgent, Hammock and other MTD-compliant platforms offer the required functionality to maintain digital records and submit them quarterly. 

 

Once the software is in place, it’s important to adopt good habits - record income and expenses consistently, keep digital copies of receipts and invoices, and ensure all relevant bank transactions are accounted for. 

 

Working with a trusted accountant can make the transition smoother. For those with multiple properties, side businesses, or inconsistent income, professional support is often the most efficient and risk-free route to compliance. 

 

 

At Property Tax Advice, we work closely with landlords, sole traders, and growing businesses to help them prepare for the shift to digital tax. Whether you're just starting out or already managing a complex portfolio or trading business, our team can guide you through the process of becoming MTD-compliant. 

 

We’ll help you select the right software solution, train you on how to use it, and provide ongoing support to ensure you remain up to date with HMRC requirements. Our focus is on making your life easier, freeing you up to focus on what really matters: growing your business or managing your investments. 

 

 

The shift to Making Tax Digital for landlords and the self-employed is already underway. While the idea of quarterly reporting and digital records may seem daunting at first, it represents a meaningful step forward in how tax is managed in the UK. For those who take action early, MTD can streamline processes, reduce stress, and provide greater financial oversight. 

 

At Property Tax Advice, we’re here to help you prepare for every stage of the journey - from understanding your obligations to getting your systems in place. Whether you’re a landlord, sole trader, or small business owner, our goal is to make tax one less thing for you to worry about. 

 

Get in touch today, and let’s make digital work for you. 

 

We’ve compiled answers to the most common questions about MTD for landlords and the self-employed. Check out the FAQs here. 

 

Want to learn more about how Making Tax Digital will affect you? Join our free live webinar on Wednesday 30th April, where we’ll cover key deadlines, software options, and how to stay compliant with confidence. Sign up for free here.