Making Tax Digital for income tax (MTD IT) is no longer a distant plan. From 6 April 2026, many sole traders and landlords will have to keep digital records and send quarterly updates to HMRC using compatible software. If you are used to doing your self assessment once a year, this is a big shift in rhythm, admin and how you stay on top of tax.
HMRC estimates there were 7 million people in self assessment with self-employment or property income in 2023/24, and around 864,000 of them will be mandated into MTD from April 2026 because their qualifying income is over £50,000 (HMRC, 2025). That is a lot of sole traders and landlords needing to rethink their record-keeping.
Why does it matter now, not in spring 2026? Because the move to quarterly reporting works best when you have clean data, a steady bookkeeping habit and software you understand. Leaving it late tends to create messy catch-up work, rushed training and avoidable errors. Getting ready in 2025/26 gives you time to test the process, fix gaps, and build a routine that protects your cashflow and keeps you compliant.
Who is affected: Sole traders and landlords in scope
The rules apply based on your qualifying income, which is broadly your gross income from self-employment and property rentals, before expenses. HMRC’s current timetable is as follows.
- If your qualifying income was over £50,000 in 2024/25, you must join MTD IT from 6 April 2026.
- If it was over £30,000 in 2025/26, you must join from 6 April 2027.
- A future threshold of £20,000 has been signalled but is not yet legislated. See HMRC’s eligibility guidance for the full details on thresholds and dates.
What catches some people out is that the threshold looks at combined qualifying income. So if you are both a sole trader and a landlord, your trading and rental income stack together. The same goes if you have more than one rental property – the total rent matters.
If you are under the threshold, you can still join voluntarily. Many sole traders and landlords are choosing to do this so they can get used to the format early and avoid a hard-stop change later.
What changes in practice
Under MTD IT, here’s what sole traders and landlords will need to do.
Keep digital records: Your income and expenses must live in digital form, either directly in compatible software or via a digital link from spreadsheets. Manual re-typing is not allowed.
Send quarterly updates: Every three months, you send a cumulative summary of income and expenses for each business. If you have both sole-trader income and rental income, you submit separate updates for each, meaning up to eight submissions a year.
Submit an end-of-period statement (EOPS): After the tax year ends, you finalise each income source, make adjustments and confirm the figures.
File a final declaration: This replaces your self assessment return, bringing all income together and confirming tax due.
Quarterly updates are not tax bills. Think of them as progress reports. They give HMRC a running view of your numbers, and they give you a clearer picture of profit and tax risk through the year.
Choosing software and setting it up
You will need MTD-compatible software to send updates. HMRC maintains a live list of products that work for quarterly updates and final declarations (HMRC, 2025). Some are full bookkeeping systems, others are simpler bridging tools that connect spreadsheets to HMRC.
When picking software, we suggest sole traders and landlords start with first principles: what do you need the system to do, day to day?
If your records are currently light: A simple app that lets you scan receipts, categorise costs and track bank feeds may be enough.
You want real-time management info: A fuller cloud package will give stronger reporting and forecasting.
If you love spreadsheets: Bridging software can be a good stepping stone, but you still need disciplined digital links and clean templates.
The key is to set the system up once, properly. That means getting your chart of accounts right, confirming which costs are allowable and automating bank feeds where possible. Our cloud accounting services are designed for exactly this, helping sole traders and landlords choose a tool, set it up and feel confident using it before MTD becomes mandatory.
Building a quarterly routine that actually works
Quarterly reporting sounds heavy, but most of the work is habit-based. A simple routine is usually enough:
Weekly or fortnightly bookkeeping: Keep on top of sales, rent received and costs while they are fresh. This reduces errors and stops the year-end scramble.
Monthly review: Check your profit trend, spot unusual costs and estimate likely tax. This is where you protect cashflow.
Quarterly pre-submission check: Before you file the update, confirm that income dates are right, personal items are excluded and any big one-off costs are explained.
For sole traders and landlords with seasonal income, quarterly updates can be a real benefit. You see the peaks and dips earlier, rather than discovering them months later. It often leads to better pricing, clearer rent strategy or earlier decisions on costs.
If you have multiple properties, or both trading and rental income, we can help you map those streams cleanly so updates stay tidy. That support blends well with our tax return accountants service, especially in the first MTD year when the EOPS and final declaration are new.
Common risks and how to avoid them
Most MTD issues come from three places.
- Poor starting data
If opening balances are wrong, or you have gaps in your income history, your quarterly numbers won’t mean much. We recommend a clean-up phase before April 2026, especially for sole traders and landlords who have mixed income. - Mis-categorised expenses
MTD makes errors visible faster. If you code repairs as capital improvements, or mix private and business costs, you can distort profit and tax. A short onboarding session with your software can prevent months of rework. - Leaving submissions to the last minute
Quarterly updates have fixed deadlines. Missing them will bring penalties once HMRC switches the regime fully on. Building a repeatable timetable now avoids stress later.
A wider point is that HMRC is not doing this for fun. The tax gap from error and failure to take reasonable care remains significant, and digital reporting is part of their response. For sole traders and landlords, a steady digital process is your best defence.
Your next steps for 2025/26
MTD IT is a new compliance rhythm, but it can also become a better way to run your finances. When the data is up to date, your decisions improve and surprises fall away.
Here is a practical roadmap for sole traders and landlords before April 2026.
Get clear on your qualifying income: Work out whether you cross the £50,000 threshold based on 2024/25 figures.
Choose your software early: Use HMRC’s approved list to pick a tool that fits your working style (HMRC, 2025).
Move record-keeping into the system: Build the habit now, not next spring.
Test quarterly updates voluntarily: If you are close to the threshold, a trial year is often the safest way to learn.
Plan support for year end: The first EOPS and final declaration will feel different. Having help lined up reduces risk.
We are already helping clients prepare, and the earlier we start, the simpler it is. If you are a sole trader or landlord who expects to join MTD in 2026, talk to us now. A short planning call can confirm your start date, sort your software and set a quarterly routine that keeps you compliant and protects your cashflow. Get in touch to discuss support for sole traders and landlords under MTD IT.