Countdown To Making Tax Digital for UK Landlords and The Self-Employed: Four Tax Submissions A Year Set to Become the Norm
- TBA
- Feb 18
- 4 min read
HMRC has recently sent official letters to more than 200,000 taxpayers, warning them that they will soon be affected by a major tax reform – Making Tax Digital for Income Tax (MTD).
As the implementation date approaches, sole traders and landlords with annual gross income exceeding £50,000 will be mandatorily brought into the MTD regime from 2026.
According to HMRC’s timetable, MTD will officially come into force on 6 April 2026. With the policy now entering its countdown phase, affected taxpayers should begin preparing as early as possible to avoid unnecessary penalties arising from late or incorrect submissions.
Mandatory inclusion where gross income exceeds the threshold
At present, Making Tax Digital mainly applies to VAT.
However, the full digitalisation of Income Tax reporting will be phased in from 6 April 2026, primarily targeting sole traders and landlords.
Unless an exemption applies, sole traders and landlords must use Making Tax Digital for Income Tax if they meet all of the following conditions:
Registered for Self Assessment
Have income from self-employment and/or property letting
Have qualifying income* exceeding the MTD threshold
* Qualifying income refers to the total annual gross income in a tax year from self-employment and/or property letting, before the deduction of any expenses or taxes.
The following types of income are not included as qualifying income:
Employment income (PAYE)
Partnership income
Dividend income, including dividends from your own company
In addition, regardless of whether you live in the UK, if you earn rental income from UK property and are registered for Self Assessment, you fall within the mandatory scope. As a result, non-UK resident landlords will also be affected by the new MTD rules.
Making Tax Digital thresholds will reduce year by year
From April 2026, individuals with annual income from self-employment and/or property exceeding £50,000 will be required to use Making Tax Digital for Income Tax. It is estimated that around 780,000 people will fall within this scope.
Furthermore, the mandatory MTD threshold will be reduced progressively to cover more individuals:
From 6 April 2027, landlords and self-employed individuals with annual income over £30,000 must register for MTD;
From 6 April 2028, landlords and self-employed individuals with annual income over £20,000 must also register for MTD.
In other words, within the next three years, the vast majority of landlords and self-employed individuals will inevitably be brought into the MTD system.
From once a year to four times a year
The introduction of Making Tax Digital represents a significant change to the timing of Income Tax reporting from the 2025–26 tax year onwards.
From 6 April 2026, eligible taxpayers will be required to submit quarterly updates to HMRC on a standardised schedule, rather than filing only one annual return.
You may be wondering:
Does moving from one submission a year to four make tax reporting more burdensome?
Will my tax burden increase significantly?
In fact, the core aim of MTD is to spread tax administration throughout the year, replacing the previous high-pressure January Self Assessment deadline, thereby improving efficiency and reducing the risk of errors.
In response to concerns about increased complexity, HMRC has emphasised that MTD does not require taxpayers to submit additional tax returns.
Under the new model, taxpayers will indeed submit quarterly updates, but these are not full tax returns. Instead, they consist of brief summaries of income and expenses automatically generated by compliant software. This can be viewed as an ongoing digital bookkeeping process involving communicating data to HMRC four times a year, rather than submitting everything in one go in January.
If errors are identified during the reporting process, taxpayers can correct them in the next quarterly update, without waiting for the annual return or submitting additional documents, improving both flexibility and accuracy.
Making Tax Digital for businesses — VAT
As HMRC will automatically enrol all newly VAT-registered businesses into Making Tax Digital for VAT, unless they are exempt or have applied for exemption, there is no need to register separately. Businesses simply need to use compatible software to keep VAT records and submit VAT returns.
How to register for MTD for Income Tax
Before starting the registration process, please ensure you have the following information ready:
A Government Gateway ID (if you do not have one, it can be created during registration)
Your National Insurance number
Business details (such as business name and start date). Landlords must also provide evidence of rental income (for example, rent statements)
The name of the MTD-compatible software you are using or plan to use (such as QuickBooks, Xero or FreeAgent)
Taxpayers must use HMRC-recognised software to automatically record transactions, categorise income and expenses, submit quarterly updates and final declarations, and provide tax forecasts and reminders.
Common software options include Xero, QuickBooks, FreeAgent, Sage and 123 Sheets. Once the steps have been completed, HMRC will notify you by email or text within five to seven days to confirm whether registration has been successful. If you are unfamiliar with digital systems or have multiple sources of income, you may also appoint an accountant or tax advisor to register on your behalf.
The view from TB Accountants
With only a few months remaining before Making Tax Digital for Income Tax comes into effect, now is the right time to start preparing.
Whether you fall within the MTD scope depends on gross income, not net profit. Even if you also have employment or investment income, you may still be required to use MTD if your self-employment or property income exceeds the threshold.
The taxation system is undergoing a structural transformation. The earlier you adapt, the smoother the transition will be.
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