Making Tax Digital for Landlords and Self Employed
As part of the Government’s strategy to reduce the tax gap, MTD has been introduced. This means that:
· Records must be kept digitally
· Authorised software that complies with MTD requirements must be used
· Updates are submitted every quarter
How will MTD work?
A quarterly summary will be sent to HMRC using authorised MTD-compatible software. The dates are fixed as:
After each quarterly submission, HMRC will calculate an estimated tax bill, allowing the sole trader/landlord to budget accurately for their income tax bill.
At the end of the year, a final statement is submitted to HMRC, confirming the quarterly figures previously submitted, with any accounting adjustments made.
The final income tax bill will still be payable by 31 January.
Benefits of MTD
Whilst it may seem daunting at first, there are benefits to MTD.
- The quarterly submissions mean that tax payments are going to be more accurate
- You will save time by integrating tax management with other business processes by using the right software. Some software offers complex AI task assistance, whilst others are more basic. There will be an option that suits you and your business
- Record keeping will be easier – all in one place, and up to date
- The submission to HMRC is completed via the MTD software
- You will have a clearer picture of cashflow and understand how your business is performing throughout the year
Who will be affected?
Ultimately it looks like everyone who completes a self-assessment form will need to join MTD but this is being introduced on a phased basis. It may be that those with a turnover of below £30,000 have an adapted system to suit their needs better but this is still under review by the government.
The next roll-out is April 2026 and will apply to businesses, self-employed individuals and landlords who pay income tax and have a turnover of more than £50,000.
In summary
April 2026 – self-employed and landlords with a turnover above £50,000 will need to report their income tax under MTD.
April 2027 – self-employed and landlords with a turnover above £30,000 will need to report their income tax under MTD.
Those self-employed and landlords with a turnover below £30,000 may be required to join but this has not yet been confirmed. The government is currently reviewing how MTD can be adapted to suit smaller businesses.
Next Steps
- Although you may not legally need to keep digital records until April 2026/April 2027, there is no reason why you can’t start the transition now. Keeping your records up to date, and with an electronic copy, will make your tax return much easier. If you still have lots of paper evidence, think about taking a photo, or scanning it as you paper file.
- You can sign up voluntarily to start now if you would like to just jump in and get on with it.
- There is a list of currently approved software on the Gov.uk website – and a further list of software which is in production but not yet approved.
- Talk to us! We can lead you through the changes, advise you on the best software to use, and get you set up ahead of 2026 without any panic or fuss.
We look forward to hearing from you.