If you are self-employed or earn rental income, a significant change is coming to the way you report your earnings to HMRC. Making Tax Digital (MTD) is being rolled out for Income Tax, and from April 2026, it will affect tens of thousands of landlords and self-employed individuals across the UK.
This guide explains what MTD means, who is affected by Making Tax Digital, what the deadlines are, and how to get ready – without the jargon.
Key Points at a Glance
- MTD for Income Tax starts 6 April 2026 for those with qualifying income over £50,000.
- The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
- You will need to keep digital records and submit quarterly updates to HMRC instead of a single annual return.
- MTD-compatible software is required – you cannot continue to file manually.
- Failing to comply can result in penalties and delays to your tax return.
What Is Making Tax Digital?
Making Tax Digital is HMRC’s initiative to modernise the UK tax system. For Income Tax, it requires eligible taxpayers to keep digital records of their income and expenses and submit quarterly updates to HMRC throughout the year, rather than filing a single annual tax return.
The aim is to reduce errors, improve accuracy, and give both taxpayers and HMRC a clearer view of finances as they happen.
Who Is Affected by Making Tax Digital?
MTD for Income Tax applies to individuals who earn income from self-employment, rental properties, or a combination of both. HMRC assesses your total qualifying income before expenses or taxes are deducted.
The rollout follows a phased timetable:
- From 6 April 2026: if your qualifying income exceeded £50,000 in the 2024/25 tax year
- From April 2027: the threshold reduces to £30,000
- From April 2028: the threshold reduces further to £20,000
Even if you are currently below the threshold, the window to prepare is narrowing. Starting to keep digital records now will make the transition considerably smoother when your obligation kicks in.
Making Tax Digital for Landlords
For landlords, MTD represents one of the most significant changes to property income reporting in years. If your rental income – alone or combined with any self-employment income – exceeded £50,000 in the 2024/25 tax year, compliance is mandatory from 6 April 2026.
Instead of reporting your property income once a year through Self Assessment, you will need to submit four quarterly updates per tax year to HMRC, detailing your rental income and allowable expenses as you go. An end-of-year finalisation statement then replaces the traditional annual return.
Our private client tax services help landlords understand how MTD interacts with their wider tax obligations, including rental income accounts, capital gains, and property ownership structures.
Making Tax Digital for the Self-Employed
If you are self-employed, the same principles apply. Your qualifying income is calculated before business expenses or taxes are deducted. If that figure exceeded £50,000 in the 2024/25 tax year, the Making Tax Digital deadline of 6 April 2026 applies to you.
Under MTD, you will need to:
- Keep digital records of all business income and expenses throughout the year
- Use HMRC-approved, MTD-compatible software to maintain those records
- Submit four quarterly updates to HMRC each tax year
- Complete a final end-of-year declaration in place of your current Self Assessment return
Many self-employed individuals find that the quarterly rhythm actually makes managing their tax affairs more straightforward, rather than facing a large administration task once a year.
What Do You Need to Do?
Getting MTD-ready involves three core steps:
- Register for MTD with HMRC. You will need to be registered for Self Assessment and have filed a return within the last two years.
- Choose MTD-compatible software. HMRC maintains an approved list of software providers, and your accountant can advise on the best fit for your circumstances.
- Submit quarterly updates throughout the tax year, followed by your end-of-year finalisation.
On the question of what software you need for Making Tax Digital – if you would rather not manage this yourself, Ward Goodman offers access to an MTD-compatible software subscription for just £7 per month, alongside full support for your quarterly submissions.
Making Tax Digital Penalties: What Happens If You Don’t Comply?
Failing to comply with MTD can result in penalty points for late quarterly submissions. Crucially, you will not be able to file your annual tax return until all outstanding quarterly updates are submitted and up to date.
HMRC has confirmed that it will not issue penalty points for late quarterly updates during the first year of mandatory compliance (the 2026/27 tax year) – a concession designed to give taxpayers time to adjust. However, penalties for late tax returns and unpaid tax bills will still apply from day one.
The message is clear: the time to prepare is now.
How Ward Goodman Can Help
At Ward Goodman, we work with landlords and self-employed individuals to make MTD straightforward and stress-free. Our services are transparently priced and tailored to your needs:
- Bookkeeping: £52.50 + VAT per hour
- Quarterly review and submission (with bookkeeping): £175 + VAT per quarter
- Quarterly review and submission (without bookkeeping): £250 + VAT per quarter
- MTD-compatible software subscription: £7 per month
- Any pre-Tax Return adjustments, where required, will be quoted separately on a POA basis
From HMRC registration and software setup through to managing your quarterly submissions, our experienced team handles the details so you can focus on what you do best.
Explore our personal tax return services or find out more about our private client tax services to see how we support clients with ongoing tax compliance.
Frequently Asked Questions
When does Making Tax Digital start?
MTD for Income Tax becomes mandatory from 6 April 2026 for individuals with qualifying income over £50,000. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. You can also sign up voluntarily before your mandatory start date to get used to the process early.
Who is affected by Making Tax Digital?
MTD applies to self-employed individuals and landlords whose combined qualifying income from self-employment and rental properties exceeds the relevant threshold. HMRC calculates this income before expenses or taxes are deducted.
What does Making Tax Digital mean for landlords?
Landlords with rental income above the relevant threshold will need to switch from filing an annual Self Assessment tax return to submitting quarterly updates to HMRC via MTD-compatible software. A final end-of-year declaration replaces the traditional annual return.
What software do I need for Making Tax Digital?
You will need software that is approved by HMRC for MTD for Income Tax. There are various options available at different price points. Ward Goodman offers clients access to a compatible software subscription for £7 per month, with full support included. We can help you choose the right solution for your situation.
What are the Making Tax Digital penalties?
If you miss quarterly submission deadlines you will accumulate penalty points, which can lead to financial penalties. You will also be unable to file your annual tax return until all outstanding quarterly updates are submitted. HMRC is waiving penalty points for late quarterly submissions during 2026/27, but penalties for late returns and unpaid tax still apply.
Do I need to register for MTD even if I am below the threshold?
If your income is currently below £50,000, you are not yet required to comply – but the threshold is set to fall in 2027 and again in 2028. Starting to keep digital records now is sensible preparation, and voluntary sign-up is available if you want to get ahead of the requirement.
Can Ward Goodman manage my MTD submissions for me?
Yes. Ward Goodman offers a full MTD service, including registration with HMRC, software setup, bookkeeping, and quarterly review and submission. Our fixed fees mean you always know what to expect. Get in touch to discuss the right package for your needs.
Where can I find official HMRC guidance on Making Tax Digital?
You can find full details on the HMRC Making Tax Digital for Income Tax guidance pages on GOV.UK.
Ready to Get Ahead of Making Tax Digital?
The April 2026 deadline is closer than it looks. Whether you are a landlord preparing for quarterly reporting, a self-employed individual getting to grips with digital record-keeping, or simply unsure where to start, Ward Goodman can help.
Our experienced team offers fixed-fee MTD services, transparent pricing, and dedicated ongoing support – so you can stay compliant without the stress. MTD does not have to be complicated.
Call us today on 01202 875 900, or contact us to find out how we can make Making Tax Digital work for you.
