Why Making Tax Digital (MTD) is good news for your business
The UK government is trying to modernise the tax system with Making Tax Digital (MTD). This means that many individuals must register, record, and file their tax returns online using software that works with it. If you are a landlord, freelancer or sole trader and are wondering, does MTD apply to you, and what do you need to do? This blog will answer all your questions.
MTD with apply to individuals with self employment income and landlords with qualifying income over £50,000 from April 2026. The goal is to make the system more efficient by reducing tax reporting errors. This will be done by updating financial records more frequently and making it easier to track profits and predict cash flow.
MTD has applied to all VAT-registered businesses since April 2022. From April 2026, it will also apply to individuals with self employment income and landlords with qualifying income over £50,000, bringing smaller businesses and property owners into the digital reporting regime.
What is MTD and the latest HMRC deadlines?
Making Tax Digital (MTD) is the new tax system introduced by HMRC to replace the manual tax system with software solutions for keeping digital records and submitting quarterly reports.
To ensure you are correctly following the new MTD rules for income tax self-assessments (ITSA), here are some important dates to remember.
6 April 2026: MTD for ITSA comes into effect, making it mandatory for sole traders and landlords with an annual income of over £50,000 from self-employment and property.
7 Aug 2026: Deadline to submit the first quarterly update for the 2026-27 tax year.
31 Jan 2027: Final ITSA returns filing under the old tax system for the 2025-26 tax year.
6 April 2027: Income threshold lowered to £30,000, bringing more sole traders and landlords into scope.
April 2028: Further expansion of MTD to cover individuals with self employment income and landlords with an income of over £20,000.
Who gets affected by MTD?
At the moment, MTD applies to individuals with annual incomes over £50,000, including.
The advantages of MTD compliance
It may seem like more work at first, but for companies that follow MTD rules, there can be many benefits.
Individuals get clearer visibility into how much tax they owe throughout the year, rather than a surprise at year-end.
By updating their books and submitting reports once every three months, it’s easier to foresee tax liabilities and manage finances.
Manual systems are usually at greater risk of making costly mistakes when calculating tax and submitting returns. A digital tax system with regular updates helps prevent such errors that can attract fines.
Individuals can track their profits and quarterly performance on the software’s dashboard, helping improve overall financial efficiency.
How Abbott & Brown can help with MTD compliance
For many self-employed individuals and landlords, complying with the new MTD rules can seem overwhelming.This is where the services of an expert accounting firm like Abbott & Brown, with a team of ICAEW and ACCA certified chartered accountants, can be helpful. Our one-stop MTD services include .
How acting early can help
Time to adapt systems
Moving from annual tax returns to quarterly digital updates requires changes to record-keeping processes and software. Early preparation allows time to implement and refine these systems properly, rather than rushing at the deadline.
Testing the system
Starting early enables taxpayers and their accountants to test MTD-compatible software, resolve any issues, and ensure data is being captured accurately and consistently throughout the year.
Training and adjustment time
It allows sufficient time for individuals or internal teams to become familiar with new processes and reporting requirements before they become compulsory.
Book a free consultation
Whether you are a landlord, freelancer or sole trader with an annual income of over £50,000 and need help with MTD compliance, you can get in touch with our accounting and tax experts. Our no-obligation consultations are free, and we respond to all enquiries within 24 hours.
FAQs
Q1. What is Making Tax Digital (MTD)?
The UK government introduced MTD, which requires individuals with self-employment income and landlords with incomes above a certain level to keep digital records of their finances and submit quarterly updates using HMRC-approved software.Q2. When do I need to comply with MTD?
MTD compliance begins for individuals with self-employment income and landlords with income over £50,000 from April 2026. This compliance will further extend to individuals with self employment income and landlords with an income over £30,000 from April 2027.Q3. Do landlords need to follow MTD rules?
Yes, landlords with annual income above the set limit must follow all MTD rules.Q4. What are the deadlines for Making Tax Digital (MTD)?
While MTD for income tax comes into effect from 6 April 2026, the deadline to submit the first quarterly update is 7 August 2026.Q5. Will Making Tax Digital include all taxes in the future?
Very likely, the government’s long-term aim is a fully digital tax system, so it is expected that additional taxes and income streams will be brought into MTD over time.Q6. What happens if I miss the MTD deadline?
A single late filing or missing the MTD deadline for quarterly updates or final declarations will trigger the HMRC’s points-based penalty system.You receive one point per late submission (quarterly updates or end-of-year returns). A £200 fine applies when reaching 4 points.About the Author
Christina brings over a decade of senior accountancy experience, having served as the Director at MG Accountancy from 2014 to 2023, following which she completed her LLM in International Tax Law (2023–2025).
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