Making Tax Digital for Income Tax – preparing now

The government’s Making Tax Digital (MTD) programme is set to expand in April 2026, and it will affect many landlords and sole traders. From that date, anyone with annual business or property income above £50,000 will need to comply with the new rules.

Although April 2026 may sound distant, the changes are significant, and the steps needed to prepare take time. Affected business owners should begin making adjustments now rather than waiting until the deadline approaches.

Who will be affected

The first group brought into MTD for Income Tax will be:

  • Sole traders with business income over £50,000 a year
  • Landlords with property income above the same threshold

Income in this context means gross business or property income before expenses or allowances are deducted. For example, a landlord with £52,000 annual rental receipts and £15,000 of related costs would still fall within the new regime because the gross income is above £50,000.

From April 2027, the entry point will be lowered further, capturing those with income over £30,000. Partnerships will join at a later stage.

What will change

The biggest shift is the move from one annual tax return to quarterly digital updates plus an end-of-year declaration. This means:

  • Keeping digital records of income and expenses
  • Submitting updates to HMRC every three months using compatible software
  • Completing a final declaration to confirm the figures for the year

This structure is intended to provide HMRC, and taxpayers, with a more up-to-date view of tax liabilities.

Why start preparing now

Adapting to quarterly reporting is not simply a case of pressing a new button in April 2026. Clients will need:

  • Suitable bookkeeping software that is MTD compatible
  • A regular process for capturing income and expenses digitally
  • Training and support to make sure quarterly submissions are accurate

Waiting until 2026 risks a rushed transition during what is already a busy period for tax advisers and their clients.

Key message

Making Tax Digital for Income Tax is one of the most significant changes to the tax system in recent years. Preparing early will reduce disruption and allow affected taxpayers to adapt smoothly.

If you would like to discuss how these changes could affect you or your business, please contact us for guidance and support.

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