HMRC Is Signing Up Sole Traders and Landlords for Making Tax Digital – What You Need to Know

HMRC Is Signing Up Sole Traders and Landlords for Making Tax Digital – What You Need to Know

Making Tax Digital for Income Tax is now a reality for thousands of UK sole traders and landlords.

From 6 April 2026, certain individuals with income from self-employment or property became required to use Making Tax Digital (MTD) for Income Tax. HMRC has also confirmed that from September 2026, it will begin signing up people who should already be using the system but have not yet signed up themselves.

If you are self-employed, a landlord, or receive income from both sources, now is a good time to check whether the new rules apply to you and whether your bookkeeping systems are ready.

Who needs to use Making Tax Digital for Income Tax?

For the 2026/27 tax year, you generally need to use MTD for Income Tax if you:

• are registered for Self Assessment;
• receive income from self-employment, property, or both; and
• had qualifying income of more than £50,000 in the 2024/25 tax year.

Qualifying income is broadly your gross income before expenses from self-employment and property combined.

The rollout is being introduced gradually:

Qualifying incomeMTD start dateMore than £50,0006 April 2026More than £30,0006 April 2027More than £20,0006 April 2028

This means even if you are not required to use MTD during 2026/27, you may need to prepare for it soon.

What is changing from September 2026?

HMRC has stated that from September 2026, it will start signing up people who need to use Making Tax Digital for the 2026/27 tax year if HMRC's records show qualifying income above £50,000 for 2024/25 and they have not already signed up.

If HMRC contacts you to confirm that you have been signed up, you should not ignore the notice.

You will still need to make sure that:

• suitable MTD-compatible software is in place;
• your income and expenses are being recorded digitally;
• all relevant income sources are correctly included;
• your accounting records are up to date; and
• you understand when your quarterly updates need to be submitted.

Being signed up by HMRC does not automatically mean your bookkeeping system is ready.

What does Making Tax Digital actually require?

MTD changes how qualifying sole traders and landlords maintain and report their financial information.

You or your accountant will generally need compatible software to:

• create and maintain digital accounting records;
• record self-employment and/or property income and expenses;
• send quarterly updates to HMRC; and
• complete your tax return through compatible software.

HMRC describes the quarterly updates as summaries of the digital records maintained during the relevant period.

For many businesses and landlords, this makes accurate and regular bookkeeping more important than leaving records until the end of the tax year.

What are the quarterly deadlines?

For taxpayers using the standard update periods from April 2026, HMRC lists the quarterly update deadlines as:

• 7 August 2026 – first quarterly update
• 7 November 2026 – second quarterly update
• 7 February 2027 – third quarterly update
• 7 May 2027 – fourth quarterly update

The exact periods can differ depending on your accounting period and whether standard or calendar update periods apply.

If you have only recently realised that MTD applies to you, it is important to review your position rather than assuming you can wait until the normal Self Assessment deadline.

Do you still need to submit a tax return?

Yes.

Making Tax Digital does not simply remove the tax return requirement.

HMRC states that you will use your compatible software to make the necessary adjustments, include other relevant income or gains and ultimately submit your tax return.

You therefore still need complete and accurate year-end information even though financial information is being maintained digitally throughout the year.

What if you missed a quarterly update?

HMRC currently states that people required to use MTD from 6 April 2026 will not receive penalty points for late quarterly updates during the first tax year, 2026/27.

However, this does not mean that all deadlines can safely be ignored.

Penalties may still apply for a late tax return or late payment of tax.

If you believe you have already missed an MTD obligation, it is sensible to establish what should have been submitted and correct your records promptly.

What software do you need?

MTD requires software that can work with HMRC's system.

The right setup will depend on how you currently manage your records. For example, you might currently use:

• spreadsheets;
• bookkeeping software;
• separate property records;
• an accountant-managed system; or
• a mixture of different methods.

The key is making sure there is an appropriate digital record-keeping process and that the software being used is compatible with MTD.

Changing systems at the last minute can create unnecessary problems, particularly if transactions, opening balances or historic records need to be migrated.

What should sole traders and landlords do now?

If you are unsure whether MTD applies to you, start with your most recent Self Assessment returns.

Check your total gross income from:

• self-employment;
• UK property income; and
• any combination of the two.

Then determine which MTD threshold applies to you.

If you are already within the 2026/27 regime, you should also check whether your software, bookkeeping and quarterly submissions are up to date.

If your qualifying income is over £30,000 for 2025/26, preparing now can also make the transition to mandatory MTD from 6 April 2027 significantly easier.

Can anyone be exempt?

Some taxpayers may qualify for an exemption from Making Tax Digital, including in certain circumstances where using digital systems is not reasonably practical.

There are also specific automatic exemptions.

HMRC has separate guidance explaining who may qualify and how to apply. An exemption should not simply be assumed because someone prefers paper records or finds the new system inconvenient.

How TaxMech can help

Moving to Making Tax Digital is not just about submitting another form to HMRC. It is also about ensuring that your underlying accounting records are accurate, digital and maintained regularly.

TaxMech Consultants Ltd can help sole traders and landlords review their current bookkeeping arrangements, understand their MTD obligations and prepare their records for digital reporting.

Getting the process organised early can reduce last-minute corrections and give you a clearer picture of your finances throughout the year.