Making Tax Digital for Income Tax is finally coming into force from April 2026, and it will change the way landlords and small business owners report their income to HMRC.

The aim is simple: move everyone from yearly tax returns to digital record-keeping and regular online updates. For many people this will feel like a big shift, so here is a clear breakdown of how it works.

Who must follow MTD from April 2026?

From April 2026, MTD will apply to:

• Landlords and self-employed individuals with income over £50,000 a year
• You must keep digital records
• You must use HMRC-approved software

From April 2027, this will extend to people with income over £30,000.

Anyone below £30,000 will be reviewed later, but no start date exists yet.

What changes under MTD?

You will no longer submit a single Self Assessment once a year. Instead you must:

• Keep all income and expenses digitally (no paper records).
• Submit Quarterly Updates to HMRC through approved software.
• Submit an End-of-Period Statement (EOPS) at the end of the tax year.
• Submit a Final Declaration, replacing the old annual tax return.

MTD means HMRC will see your numbers more regularly, which should reduce errors and improve accuracy, but it also means more work across the year.

Quarterly Updates

Every three months you will send income and expenses digitally. These are summaries, not full accounts. The deadlines for quarterly submissions are:

• 5 August
• 5 November
• 5 February
• 5 May

Late submissions may lead to penalties under the new points-based system.

Software You Will Need

You must keep records and send updates using HMRC-compatible software. Examples include:

• FreeAgent
• Xero
• QuickBooks
• Sage
• Other cloud accounting tools approved by HMRC

Spreadsheets alone will not be enough unless they link to bridging software.

What income counts?

The £50,000 threshold includes:

• Gross rental income
• Gross self-employment income

If you have both, HMRC adds them together to decide if you must join MTD.

Benefits of MTD

• Less risk of errors
• Tax more predictable through the year
• Digital records are easier to manage
• Reduces HMRC enquiries triggered by mistakes

Challenges of MTD

• More frequent reporting
• Digital software costs
• Time required to keep records updated
• Landlords with multiple properties will need accurate ongoing bookkeeping

How to prepare now

• Start using cloud accounting software
• Keep digital receipts (photos are fine)
• Track rental income and expenses monthly
• Speak to your accountant to check your setup is compliant
• Prepare for quarterly submissions from April 2026

Final Thoughts

MTD for Income Tax 2026 is a major change, especially for landlords and self-employed people who have always filed a single yearly return. Preparing early will make life much easier. Using the right software and keeping organised records will help you avoid penalties and stay compliant when the new system goes live.

If you need help setting up for MTD or choosing the right software, Taxes Done Right can guide you through every step.