Making Tax Digital for Income Tax: Are You Ready for 2026?
Quarterly reporting is coming for landlords and sole traders — here’s what it means, who’s affected, and why you should start preparing today.
In April 2026, the government’s Making Tax Digital (MTD) programme expands — and it’s set to reshape how thousands of landlords and sole traders manage their taxes.
From that date, anyone with annual business or property income above £50,000 will need to ditch the single annual tax return and switch to quarterly digital reporting.
It might feel like a long way off, but the changes are major. Getting ready now could save a lot of stress later.
Who’s in the first wave?
If you fall into one of these categories, you’ll be affected in 2026:
- Sole traders with business income over £50,000
- Landlords with property income over £50,000
Remember — income means gross, not profit. So, even if your rental receipts are £52,000 and you spend £15,000 on expenses, you’re still caught in the new regime.
From April 2027, the threshold drops to £30,000, sweeping in even more taxpayers. Partnerships will follow at a later stage.
What’s changing?
The headline shift: one annual return → four quarterly digital updates + one final declaration.
That means:
- Keeping all records digitally
- Sending updates to HMRC every three months via approved software
- Submitting a year-end declaration to finalise figures
For HMRC, this creates more real-time data. For taxpayers, it’s a completely different reporting rhythm.
Why prepare now?
Switching to quarterly updates isn’t as simple as flipping a switch. You’ll need to:
- Choose MTD-compatible bookkeeping software
- Put processes in place to capture expenses and income digitally
- Train yourself (or your team) to meet quarterly deadlines confidently
Waiting until 2026 risks last-minute panic — especially when accountants and advisers will be stretched thin.
Summary
Making Tax Digital for Income Tax is one of the biggest changes in recent years. By starting early, landlords and sole traders can adapt smoothly, avoid compliance headaches, and even use digital tools to get better visibility over their finances.
If you’d like tailored advice on what steps to take now, get in touch — it pays to be prepared.
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