Making Tax Digital for Income Tax is the biggest change to self assessment in decades, and it is already here for many sole traders and landlords. As an MTD accountant in Uxbridge, Ken Accounting sets up your software, keeps your records in order and files your quarterly updates for you. We agree a fixed fee up front, and the first conversation is free.
Who MTD applies to, and when
Making Tax Digital for Income Tax applies to sole traders and landlords who are registered for self assessment and have income from self-employment, property or both. Whether you must join, and when, depends on your qualifying income.
- From 6 April 2026: qualifying income over £50,000 in the 2024 to 2025 tax year
- From 6 April 2027: qualifying income over £30,000 in the 2025 to 2026 tax year
- From 6 April 2028: qualifying income over £20,000 in the 2026 to 2027 tax year
HMRC looks at your Self Assessment return for an earlier year to decide whether you need to join. For example, it used 2024 to 2025 returns to decide who had to start in April 2026.
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What counts as qualifying income
Qualifying income is your total income from self-employment and property before expenses, in other words your turnover, not your profit. That means a landlord collecting £35,000 in rent can be caught even if the profit after costs is much lower.
If you own a property jointly, only your share of the income counts. Some income does not count at all, including employment income taxed through PAYE, dividends, pensions, and your share of profit as a partner in a partnership.
Some people can apply for an exemption, for example if they are digitally excluded. If you think this might apply to you, we can talk it through.
What changes: quarterly updates and a final declaration
Under MTD, you must keep digital records of your business and property income and expenses, using software that works with MTD. You then send HMRC a summary every quarter and a final declaration after the year ends.
The standard quarterly deadlines are:
- 7 August: update covering 6 April to 5 July
- 7 November: update covering 6 April to 5 October
- 7 February: update covering 6 April to 5 January
- 7 May: update covering the full tax year to 5 April
Each update is cumulative, covering the tax year so far, so you can correct earlier figures as you go. If your accounting period runs from 1 April to 31 March, you can choose calendar quarters instead, with the same deadlines.
After the tax year ends, you make any final adjustments, add other income such as employment or dividends, and submit your tax return through MTD software. The deadline is 31 January after the end of the tax year, the same as for a normal online return.
HMRC uses a points-based penalty system for late submissions. It has said it will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. After that, you get a point for each missed deadline and a £200 penalty when you reach 4 points, so it pays to get into good habits now.
Payment dates for income tax are not changing. The quarterly updates are reports, not bills, and tax is still due on 31 January and 31 July.
Our MTD service
We take the work and the worry off your hands. Our MTD service can include:
- 1. A readiness check. We confirm whether and when MTD applies to you, using your recent tax returns.
- 2. Software set-up. We set up MTD-compatible software, connect your bank feed and set up your income and expense categories.
- 3. Sign-up. We help sign you up for MTD for Income Tax and authorise us to act for you.
- 4. Record keeping. You can keep your own records with our support, or we can keep them for you as part of our bookkeeping service.
- 5. Quarterly updates. We check your figures and submit each update before the deadline.
- 6. Final declaration. We prepare and submit your year-end return and tell you what you owe and when.
Throughout the year, we keep an eye on deadlines and chase you for anything we need. You are not left to find out about a missed update from an HMRC letter.
We do not just file the updates. Because we see your figures every quarter, we can give you an early view of your tax bill and flag anything that needs planning, rather than waiting until January.
If you are below the thresholds today, it is still worth getting ready. The £20,000 threshold from April 2028 will bring in many more sole traders and landlords, and an early start makes the switch much easier.
MTD for landlords
Landlords are one of the largest groups affected by MTD, because rental income counts towards qualifying income before any costs are deducted. Mortgage interest and other expenses do not reduce the figure used to decide whether you are in.
If you have both a business and rental property, the two are added together. Jointly owned property counts only for your share, which can make a real difference for couples who own property together.
Each update must show your property income and expenses. If you use a letting agent, we can work out a routine for getting the figures from them each quarter.
Find out more on our page for landlords and property investors.
Choosing MTD software
You will need software that works with MTD for Income Tax. HMRC publishes a list of compatible products, and the right one depends on how you work and how many transactions you have.
We are a Xero Silver Partner, and Xero is our recommended choice for most sole traders and landlords. Bank feeds bring your transactions in automatically, and you can photograph receipts as you go, so record keeping takes minutes rather than hours. See our Xero and cloud accounting page.
If you prefer spreadsheets, it may be possible to keep them and use bridging software to send your updates to HMRC. We can tell you whether that is a sensible option for you.
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What it costs
We agree a fixed fee for MTD before we start, usually paid monthly so the cost is spread across the year. The fee depends on:
- Whether you keep your own records or want us to keep them for you
- How many income sources you have, such as one business, several rental properties or both
- How many transactions you have each quarter
- Whether you need help setting up and learning new software
- The state of your records when we start
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We include MTD advice for all our self assessment clients, so you will know where you stand before your start date. See our self assessment page and our fees page.
FAQs
Does MTD for Income Tax apply to me?
It applies to sole traders and landlords with qualifying income over £50,000 from April 2026, over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is your self-employment and property income before expenses. We can check your position from your recent tax returns.
Do I still need to file a tax return under MTD?
You no longer file a separate return in the usual way. Instead, you send quarterly updates and then submit your tax return through MTD software by 31 January after the end of the tax year.
Will I have to pay tax every quarter?
No. Quarterly updates are summaries of your income and expenses, not tax payments. Income tax is still due on 31 January and 31 July.
What happens if I miss a quarterly update?
HMRC has said it will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year. After that, each missed deadline earns a point, and a £200 penalty applies at 4 points.
Can you do it all for me?
Yes. We can set up your software, keep your records, file your quarterly updates and submit your final declaration. You can meet us at our Uxbridge office or work with us entirely online.