MTD for Income Tax: What It Means for You and What to Do Now
Big changes are coming for local landlords and sole traders – here’s how to stay ahead.
From April 2026, if you’re earning over £50,000 from self-employment or rental income, you’ll need to keep digital records and send updates to HMRC every quarter. It’s called Making Tax Digital (MTD), and while it sounds daunting, you’ve got time to prepare – and we’ll guide you through it.
What’s Changing?
Right now, most people submit one Self Assessment tax return a year. But under MTD, you’ll need to:
- Use MTD-compatible software to keep digital records
- Send quarterly updates to HMRC
- Submit a digital end-of-year tax return
This is being rolled out gradually:
- From April 2026: If your income from self-employment and/or property is over £50k
- From April 2027: If it’s over £30k
- From April 2028: If it’s over £20k
Your “qualifying income” is your total business/rental income – not profit.
What It Means for You
This is one of the biggest shifts in tax since Self Assessment began. It could bring benefits like better cashflow visibility and fewer last-minute scrambles in January. But it also means:
- A learning curve if you’re not used to digital tools
- More admin, especially if you’re not already using software
- Extra costs if you need new software or support
You won’t need to pay tax quarterly (yet), but you will need to report income four times a year. That’s a big shift in mindset for many.
Common Questions Answered
Can I still use spreadsheets?
Yes, but only if they’re linked to MTD-compliant bridging software.
What if I own rental property with someone else?
There are easements for joint income – you can report a single figure each quarter and a combined expense figure at year-end.
Will HMRC fine me if I get it wrong?
Yes. Penalties of up to £3,000 per quarter apply if you don’t keep digital records once you’re required to.
What if I already do VAT returns?
You’ll still need to do MTD updates separately unless you align your VAT quarters to the MTD dates.
What You Should Do Next
Start now. You don’t need to submit MTD returns yet, but:
- Try out bookkeeping software early
- Ask your accountant (that’s us!) to help set it up
- Join HMRC’s pilot testing scheme to get familiar, with no penalties if you’re late
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Local Tip for Rochdale Area
Most of the landlords and freelancers we support around Rochdale, Bury and Todmorden aren’t MTD-ready yet. Getting prepared now gives you peace of mind before the rush hits in 2026.
👋 Need Help?
We’re already helping dozens of local businesses get ahead of the change. If you’d like a demo of simple MTD software, or want help deciding what’s best for your situation, get in touch today.
