The Headline You Need to Know
Making Tax Digital (MTD) is a UK-wide initiative mandated by HMRC, applying across England, Scotland, Wales, and Northern Ireland.
If you are a sole trader or landlord, the rules just changed.
The Key Dates (Put These in Your Calendar)
From 6th April 2026 – MTD applies if your qualifying gross income from rental properties and/or self-employment was more than £50,000 in the 2024/25 tax year.
From April 2027 – The threshold drops to £30,000.
From April 2028 – The threshold drops again to £20,000.
If you earn below these thresholds today, you will be affected in the next 24 months. Plan now.
What This Actually Means for You (No Jargon)
1. You must keep digital records
Paper spreadsheets? Receipts in a shoebox? Not anymore.
You now need MTD-compatible software (Xero, QuickBooks, FreeAgent, Sage, etc.) to record every penny of income and expense.
2. You send quarterly updates, not one annual return
Instead of hiding from your Self Assessment until January, you now send HMRC a summary every 3 months.
These are not full tax returns – just digital updates of your income and expenses.
3. You still make a Final Declaration each year
By 31st January after the tax year ends, you submit a 'Final Declaration'. This replaces the traditional Self Assessment but works alongside your quarterly updates.
Think of it as: quarterly updates + one final sign-off = done.
The Simple Yes/No Questions
"I earn just over £50k from my rental property. Do I need to act now?"
✅ YES – From April 2026, you are inside MTD. Register with HMRC and choose compatible software before the deadline.
"I earn £40k from self-employment. Do I need to do anything yet?"
✅ YES – Not yet for filing, but start preparing. You will be inside MTD from April 2027. Use this year to learn the software.
"I already file Self Assessment online. Isn't that the same?"
❌ NO – Self Assessment online is different. MTD requires software-to-software submission, not logging into the HMRC website.
"Can I just keep using my Excel spreadsheet?"
❌ NO – Not unless it connects to MTD-compatible software (some do, via bridging software). Plain Excel alone is not allowed.
"I have multiple properties and self-employment income. Does MTD apply to both?"
✅ YES – MTD looks at your combined qualifying gross income from both rental and self-employment. Add them together. If the total is over the threshold, you are in.
"What happens if I ignore this?"
⚠️ Penalties. HMRC has new penalty points for late quarterly updates. Ignore it entirely and you face fines plus interest on unpaid tax.
The Final Declaration vs Self Assessment (Key Difference)
Old Way (Pre-MTD)New Way (MTD)One annual Self Assessment by 31st January, Four quarterly updates + one Final Declaration. You could file directly on the HMRC website. You must use MTD-compatible software. Penalties for late annual return, Penalty points for late quarterly updates
Note: No table in original – just explaining clearly. The key is: quarterly updates are MANDATORY now.
What You Need to Do Right Now (Checklist)
☐ Check your 2024/25 gross income – rental + self-employment combined. Over £50k? You are in from April 2026.
☐ Choose MTD-compatible software – Xero, QuickBooks, FreeAgent, Sage, or bridging software if you love Excel.
☐ Sign up with HMRC for MTD – You must opt in through your Government Gateway account.
☐ Start keeping digital records from 6th April 2026 – Every transaction. No exceptions.
☐ Submit your first quarterly update – Deadline is 5th August 2026 (for April–June quarter).
☐ Still file your Final Declaration by 31st January 2027 – This replaces the old Self Assessment.
The Bottom Line (Read This If You Read Nothing Else)
MTD is not optional. It is law.
From April 2026, if you earn over £50k as a sole trader or landlord, you must:
Use compatible software
Keep digital records
Send quarterly updates
Submit a Final Declaration each January
The thresholds drop to £30k in 2027 and £20k in 2028. That means nearly every small landlord and sole trader will be inside MTD within two years.
Do not wait for HMRC to write to you. They expect you to know. Start researching software today.
Need Help?
HMRC official MTD guidance: Search GOV.UK for "Making Tax Digital for Income Tax"
Software comparison: Look for "MTD ITSA compatible software" on HMRC's published list
Accountant: Find a qualified accountant who already uses MTD software – they will save you hours of frustration
Final word: The days of the January panic are ending. Quarterly updates sound annoying, but they stop you from forgetting expenses all year. Most people who switch to MTD software never go back.
Just don't ignore the deadline. April 2026 is real.
Book a free initial consultation today and get personalised guidance from a qualified UK crypto accountant.
This blog provides general guidance only and is not legal or professional advice. We are not liable for actions taken based on this content. Full advice and protection apply only to clients
