Making Tax Digital (MTD) for Income Tax: What Sole Traders & Landlords Need to Know
From April 2026, Making Tax Digital (MTD) for Income Tax will change the way millions of self-employed individuals and landlords report their earnings. If your annual income from self-employment or property exceeds £50,000, it’s time to prepare.
This guide will walk you through the upcoming changes, key deadlines, and how to get MTD-ready without the jargon.
💡 What is Making Tax Digital for Income Tax?
MTD for Income Tax Self Assessment (ITSA) is part of HMRC’s wider effort to digitise the UK’s tax system. The aim is to reduce errors, increase efficiency, and simplify tax filing for both individuals and HMRC.
If you're affected, you'll be required to:
✅ Keep digital financial records
✅ Submit quarterly updates to HMRC using MTD-compatible software
✅ Complete a simplified year-end finalisation, replacing the traditional Self Assessment
📅 Key MTD Deadlines
Here’s when you’ll need to comply, based on your annual income:
April 2026: MTD becomes mandatory for those earning £50,000+ from self-employment or property
April 2027: Expands to those earning £30,000+
By 2029 (target): HMRC aims to include individuals with £20,000+ qualifying income
Before the full rollout, a testing phase will run in 2025, giving you a chance to try it out without penalty.
What Will You Need to Do?
1. Submit Quarterly Updates
Every three months, you’ll need to send a summary of your income and expenses to HMRC using MTD software. These are unadjusted summaries—no tax calculations required at this stage.
Example: If you’re a landlord earning £65,000 a year, you’ll submit four reports per year, one every quarter.
2. Keep Digital Records
Spreadsheets and paper-based systems won’t cut it anymore. You’ll need to use MTD-compliant software to maintain and organise your records.
HMRC provides a list of approved tools, with many affordable and user-friendly options available for small businesses.
3. Finalise Your Annual Submission
At the end of the tax year, you’ll confirm your income and claim any relevant reliefs. Because most data will already be submitted through the year, your year-end process becomes quicker and easier.
🧪 Why Join the 2025 Testing Phase
Volunteering for the MTD testing phase in 2025 gives you a head start and allows you to help shape the system.
Benefits include:
✅ No penalties for mistakes or late submissions
✅Early access to MTD software and support
✅ Direct feedback loop to HMRC to improve usability
⚠️ What About Penalties?
MTD will bring a new points-based penalty system:
Late submissions: Earn points each time you miss a deadline. Reach the limit, and you’ll face a fine.
Late payments: Fines will be based on how long you delay your payment—encouraging timely tax payments.
Pro tip: Submitting through MTD software can reduce the risk of late submissions and errors.
✅ How to Prepare for MTD for Income Tax
Here’s your action plan to stay ahead:
Choose the Right Software
Start using MTD-compatible software now. Many popular accounting tools already support MTD for VAT and are expanding for Income Tax.Join the 2025 Test Group
If eligible, register for the testing phase and become familiar with the system before it becomes mandatory.Digitise Your Record-Keeping
Shift from manual or spreadsheet-based records to real-time digital bookkeeping.Speak to Your Accountant
Don’t navigate this alone. A trusted accountant can help you set up the right tools and processes to stay compliant.
📣 Need Help Getting Ready for MTD?
At J-Benn Finance, we help business owners, landlords, and self-employed professionals in Witham, Chelmsford, and Southend prepare for Making Tax Digital with confidence. From choosing the right software to training and quarterly support, we make the transition simple and stress-free.
👉 Book a free MTD-readiness check or get in touch to speak to us
