Making Tax Digital for Income Tax Is Coming – Are You Ready?

Making Tax Digital for Income Tax Is Coming – Are You Ready?

From April 2026, HMRC’s Making Tax Digital (MTD) rules will apply to millions of sole traders and landlords across the UK.

If you earn over £50,000 from self-employment or property income, you will soon be legally required to keep digital records and submit quarterly updates to HMRC.

For many business owners, this is one of the biggest changes to the tax system in decades.

Here’s exactly what you need to know — and how to prepare properly.

What Is Making Tax Digital (MTD)?

Making Tax Digital is HMRC’s plan to modernise the UK tax system by:

• Moving tax reporting online

• Replacing annual tax returns with quarterly submissions

• Requiring digital record keeping

• Reducing errors and improving compliance

MTD has already been introduced for VAT-registered businesses. Now it is expanding to Income Tax.

Who Needs to Comply?

From April 2026, MTD for Income Tax will apply to:

• Sole traders earning over £50,000

• Landlords with property income over £50,000

• Individuals with combined self-employed and property income over £50,000

From April 2027, the threshold will reduce to £30,000.

If your income is below this, you won’t be required yet — but future expansion is likely.

What Will Change?

Under MTD, you will no longer submit just one Self Assessment return per year.

Instead, you will need to:

1️⃣ Keep Digital Records

Spreadsheets alone will not be enough unless they connect to approved software.

2️⃣ Submit Quarterly Updates

You must send HMRC summaries of your income and expenses every 3 months.

3️⃣ Submit a Final Declaration

At the end of the tax year, you will confirm your final position.

This means five submissions per year instead of one.

What Happens If You Don’t Comply?

HMRC is introducing stricter penalty systems alongside MTD.

Failure to:

• Keep digital records

• Submit quarterly updates

• Meet deadlines

…could result in penalty points, fines, and interest charges.

Preparation now avoids stress later.

Why This Matters for Sole Traders

If you are self-employed — construction worker, consultant, freelancer, tradesperson — this will affect you.

Quarterly reporting means:

• Your bookkeeping must be up to date

• You can’t leave everything until January

• Cash flow planning becomes essential

The benefit?
You get a clearer view of your tax position throughout the year.

Why This Matters for Landlords

Landlords are often the most unprepared group for MTD.

If your rental income exceeds £50,000:

• You must keep digital records

• Track expenses in real time

• Submit quarterly updates

This includes single-property landlords if income exceeds the threshold.

If you own multiple properties, preparation is even more important.

How to Prepare Now

Even if 2026 feels far away, early preparation makes everything easier.

✔️ Step 1: Move to Digital Bookkeeping

If you still use paper records, now is the time to switch.

✔️ Step 2: Track Income Monthly

Don’t wait until year-end.

✔️ Step 3: Separate Business & Personal Spending

This makes digital tracking easier.

✔️ Step 4: Use MTD-Ready Software

HMRC requires compatible software for submissions.

How Rebate My Tax Ltd Can Help

At Rebate My Tax Ltd – The UK’s Number 1 Tax App & Tax Services – we are preparing clients for MTD now.

Our app allows you to:

• Track income and expenses digitally

• Connect securely via Open Banking

• Categorise transactions easily

• Stay MTD-ready

• Get expert support when needed

Instead of worrying about five submissions per year, you can stay organised all year round.

Will MTD Increase Your Tax?

No — MTD does not increase tax rates.

However, it may:

• Increase administrative responsibility

• Require better organisation

• Make errors more visible

With proper software and support, compliance becomes simple.

Final Thoughts

Making Tax Digital for Income Tax is not optional — it’s happening.

If you’re a sole trader or landlord earning over £50,000, April 2026 will change how you manage tax forever.

The businesses who prepare early will benefit.
The ones who ignore it may face stress, fines, and rushed bookkeeping.

Now is the time to get ready.

🚀 Ready to Prepare?

Download the Rebate My Tax app today and stay ahead of Making Tax Digital.

Or speak to our team for personalised guidance.