Making Tax Digital for Sole Traders and Landlords in 2026: Everything You Need to Know

What Is Making Tax Digital (MTD) for Income Tax?

Making Tax Digital (MTD) for Income Tax is one of the biggest changes to the UK tax system in recent years. HMRC is introducing new rules that will require many sole traders and landlords to keep digital records and submit tax updates every quarter using compatible software.

Instead of filing one annual Self Assessment tax return, affected businesses will need to send regular updates to HMRC throughout the year.

For sole traders, freelancers, self-employed workers, and landlords, now is the time to prepare.

Who Will Need to Comply With MTD for Income Tax?

HMRC is introducing MTD in stages based on your annual qualifying income.

MTD Rollout Dates

From April 2026

Sole traders and landlords earning over £50,000 annually will need to comply.

From April 2027

Those earning over £30,000 annually will be included.

From April 2028

Those earning over £20,000 annually will need to join the scheme.

Qualifying income includes:

• Self-employed income

• Sole trader income

• Rental property income

It does not include:

• PAYE salary

• Pension income

• Dividends

• Savings interest

How Will Making Tax Digital Work?

Under the new MTD rules, businesses and landlords will need to:

Keep Digital Records

Paper records and manual bookkeeping will no longer be enough for many taxpayers.

Use HMRC-Compatible Software

Businesses will need cloud accounting software or bridging software that connects to HMRC.

Submit Quarterly Updates

Instead of one yearly tax return, taxpayers will send updates every three months.

Complete a Final Declaration

At the end of the tax year, a final declaration will confirm total taxable income and expenses.

Quarterly MTD Submission Deadlines

The standard quarterly reporting deadlines are expected to be:

Quarter	Deadline
6 April – 5 July	7 August
6 July – 5 October	7 November
6 October – 5 January	7 February
6 January – 5 April	7 May

The final tax payment deadline is still expected to remain 31 January.

Will Sole Traders Still Be Able to Use Spreadsheets?

Yes — but only if connected to HMRC-approved bridging software.

Many small businesses are expected to move to cloud accounting software such as:

• Xero

• QuickBooks

• FreeAgent

• Sage

Digital bookkeeping will become essential for staying compliant with HMRC’s new MTD rules.

What Does MTD Mean for Landlords?

Landlords with rental income above the threshold will also need to comply with Making Tax Digital.

This includes:

• Buy-to-let landlords

• Individuals with multiple rental properties

• Self-managing landlords

Many landlords who currently keep manual records or spreadsheets may need support moving to digital bookkeeping systems.

Benefits of Making Tax Digital

Although the changes may seem overwhelming at first, MTD can offer several benefits:

Better Financial Visibility

Quarterly bookkeeping helps businesses stay on top of profits and expenses.

Fewer Tax Surprises

More regular reporting can help avoid unexpected tax bills.

Improved Accuracy

Digital record keeping reduces the risk of mistakes and missing information.

More Efficient Bookkeeping

Cloud software can automate invoices, bank feeds, and expense tracking.

How Sole Traders and Landlords Can Prepare for MTD

1. Review Your Income

Check whether your self-employed or rental income exceeds the MTD thresholds.

2. Move to Digital Bookkeeping

Now is the ideal time to switch from spreadsheets or paper records to accounting software.

3. Keep Records Up to Date

Quarterly reporting means bookkeeping can no longer be left until January.

4. Speak to a Bookkeeper or Accountant

Professional support can make the transition much smoother and help avoid compliance issues.

Need Help With Making Tax Digital?

At LJB Bookkeeping and Payroll Services, we help sole traders, self-employed businesses, freelancers, and landlords prepare for Making Tax Digital with confidence.

Our services include:

• Digital bookkeeping

• Payroll services

• MTD-compliant software setup

• Quarterly submissions

• Self Assessment support

• Ongoing bookkeeping and accounting support

If you want to get ready for MTD before the 2026 deadline, contact us today for expert advice and stress-free support.