Making Tax Digital for Income Tax: what sole traders and landlords need to do.

1. Check the threshold against qualifying income

MTD for Income Tax currently applies to sole traders and landlords registered for Self Assessment whose qualifying income exceeds the relevant threshold. Qualifying income is broadly gross income from self-employment and property before expenses, combined across those sources. Employment pay, dividends and pension income are not part of this test; review any special circumstances against HMRC’s detailed guidance.

More than £50,000 on the 2024–25 return meant a start on 6 April 2026. More than £30,000 on the 2025–26 return means a start on 6 April 2027. More than £20,000 on the 2026–27 return means a start on 6 April 2028. The threshold is strictly more than the stated figure, rather than equal to it.

2. Confirm the person and income sources in scope

The current rollout is for individual sole traders and landlords, not limited companies. HMRC says the timetable for partnerships will be set later. Some people can claim exemption, including for digital exclusion, but this should be checked through HMRC’s process rather than assumed.

Check the year used for the threshold, each business and property source, joint ownership, residence and any ceased activity. An HMRC letter is useful, but not receiving one does not remove the obligation to check and sign up if required.

3. Set up records and compatible software

Choose software that works with MTD for Income Tax and decide who will keep records and submit updates. Map rent and trading receipts, costs, bank feeds, invoices and any jointly let property to the correct income source. The records need to support each submission and the year-end return.

If an agent will submit on your behalf, agree access, authorisation, when records will be supplied and who corrects missing or duplicated entries. Review the software’s handling of all your income sources and adjustments before you rely on it.

4. Plan four updates for each income source

Quarterly updates summarise income and expenses from the start of the tax year up to the end of each update period. For the standard periods, the deadlines are 7 August, 7 November, 7 February and 7 May following the final period. Calendar periods can be selected in software where appropriate, with the same filing deadlines.

The updates are not a final tax calculation. They do not require tax adjustments before submission, and an estimate shown after filing can omit other income or reliefs. If a period has no transactions, an update is still required.

5. Complete the year-end return separately

After the tax year, reconcile the records, make any appropriate accounting and tax adjustments, add other income and reliefs, review the tax calculation and submit the return through compatible software. The preceding year’s Self Assessment return is still filed in the usual way if it predates the start of MTD.

For 2026–27, HMRC says it will not apply penalty points for late quarterly updates, but outstanding updates are still needed before the return can be submitted. Late return and payment obligations remain separate. Check the current penalty guidance for later years.

6. Agree a practical handover with your adviser

Confirm the qualifying income calculation, sign-up status, software, opening records, each source of property and trading income, the four update deadlines and the person responsible for each task. Decide how corrections and unusual transactions will be raised between submissions.

Official sources and further reading

These primary sources support the framework above. Check the current version before acting because tax law and HMRC guidance can change.

• HMRC — check if and when you need to use MTD for Income Tax
• HMRC — work out your qualifying income
• HMRC — send quarterly updates
• HMRC — find software that works with MTD for Income Tax