MTD for Income Tax is now a reality for hundreds of thousands of sole traders and landlords across the UK.
Since 6 April 2026, individuals with qualifying income of more than £50,000 from self-employment and property have been required to use MTD for Income Tax.
And September marks another important point in the rollout, as HMRC begins signing up those who should already be using the system but have not yet registered themselves.
So, if you are self-employed, a landlord, or both, now is a good time to make sure you understand whether the rules apply to you and what you need to do.
What is MTD for Income Tax?
Making Tax Digital is part of HMRC’s move towards a more digital tax system.
For those within the rules, it changes the way information about self-employment and property income is recorded and reported to HMRC.
Rather than relying solely on the traditional annual Self Assessment process, those affected need to keep digital records using compatible software and provide HMRC with quarterly updates during the tax year.
You will still need to complete the necessary year-end process and pay any tax due by the relevant deadline, but the way your records are maintained and information is submitted throughout the year has changed.
Who currently needs to use MTD?
From 6 April 2026, MTD for Income Tax applies if you:
- are an individual registered for Self Assessment;
- receive income from self-employment, property, or both; and
- have qualifying income of more than £50,000 a year.
An important point is that the £50,000 threshold relates to your qualifying income before expenses, rather than your taxable profit.
If you have more than one source of qualifying income, these are considered together. For example, someone earning £35,000 from self-employment and £20,000 in gross rental income could fall within the rules because their combined qualifying income exceeds £50,000.
Other types of income, such as employment income through PAYE, do not count towards the MTD qualifying income threshold.
What is changing in September?
Until now, those required to use MTD for the 2026/27 tax year have been able to sign themselves up, or ask their accountant or agent to do so on their behalf.
From September 2026, HMRC will begin signing up people who it believes should already be using MTD for Income Tax but who have not yet registered.
HMRC will use information it already holds, including qualifying income reported for the 2024/25 tax year, to identify those affected.
However, relying on HMRC to register you may not necessarily be the best approach.
Your circumstances may have changed since your previous tax return was submitted, and the information HMRC holds may therefore not reflect your current position. Checking your position yourself – or speaking to your accountant – gives you an opportunity to make sure your income sources and details are correct.
What do you need to do under MTD?
If MTD for Income Tax applies to you, there are several ongoing requirements.
You need to keep digital records of your self-employment and/or property income and expenses using software that is compatible with MTD.
You will also need to send quarterly updates to HMRC. These provide a summary of your income and expenses for each quarterly period.
It is worth remembering that these quarterly updates are not four additional tax returns. They are designed to give HMRC more regular information based on the digital records you are already keeping.
You will then complete the required year-end process through compatible software, including providing information about any other income or gains where necessary.
Haven’t signed up yet?
If your qualifying income is above £50,000 and you have not yet dealt with MTD, don’t ignore it.
More than 570,000 customers had already signed up to MTD for Income Tax by August, with more than 436,000 having successfully submitted their first quarterly update.
HMRC has also confirmed that customers who had not submitted their first quarterly update could still do so, with no penalty for late quarterly updates during this first year of the new system.
That does not mean it is worth putting things off, though. Getting your records and software in order now should make the rest of the tax year significantly easier.
And what if your income is below £50,000?
Even if you are outside the current threshold, it is worth keeping MTD for Income Tax on your radar.
The government is introducing the system in stages, which means more sole traders and landlords are expected to come within Making Tax Digital requirements in future years.
Moving towards good digital bookkeeping now can make that transition much easier when the rules eventually apply to you.
How Blue Spire can help
Tax changes can feel complicated, particularly when new reporting requirements and software are involved.
At Blue Spire, we can help you understand whether Making Tax Digital applies to you, check your qualifying income, make sure you have the appropriate systems in place and support you with your ongoing reporting requirements.
| If you are unsure whether you should already be using Making Tax Digital, or you have received communication from HMRC about MTD for Income Tax and are not sure what to do next, please get in touch with our team. |
