MTD for income tax: nearly there!

Making Tax Digital (MTD) for income tax will be mandated for a large group of self-assessment taxpayers from 6 April 2026, with even more individuals being mandated in 2027 and 2028. If your combined turnover from a sole trade or property business was over £50,000 in the 2024/25 tax year, you will likely be required to comply with the MTD for income tax rules from 6 April 2026.

Reports of various recent surveys indicate that many landlords are not confident that they understand the requirements of MTD for income tax. Many are concerned or worried about the changes.

What changes for landlords

Landlords with qualifying property income above the MTD thresholds will also have to move to digital record-keeping and quarterly updates. HMRC treats UK and overseas property income, and any joint lets, within the scope of MTD where it is taxed through income tax.

Key points for landlords:

• You must keep digital records of rental income and allowable expenses for your property business.
• If you also trade as a sole trader, you must send separate quarterly updates for your rental business and your sole trader business.
• If you jointly let a property, you can choose to include either all income and expenses for those properties or only your share of the income in quarterly updates, but you must bring all expenses into the end-of-year calculations.
• Type of property does not affect MTD; it is driven by the level of taxable rental income, not by whether the property is a flat, house, furnished or unfurnished.

Surveys suggest many smaller landlords still keep manual records. One recent estimate found nearly 70% of landlords with one or two properties still use spreadsheets or paper. For those affected in April 2026, the next few months are an important time to move onto suitable software.

Key dates up to and after April 2026

The first mandatory MTD year for the more than £50,000 group will be the 2026/27 tax year, but preparation starts before that. The main dates to bear in mind are the following.

• 6 April 2026
  Start of the 2026/27 tax year. If your qualifying income for 2024/25 was over £50,000, you must begin using MTD-compatible software from this date.
• 7 August 2026
  Deadline to send your first quarterly update for 6 April to 5 July 2026 (or 1 April to 30 June if you choose calendar quarters).
• 7 November 2026, 7 February 2027, 7 May 2027
  Deadlines for the remaining three quarterly updates for 2026/27.
• 31 January 2027
  You still file a “traditional” self assessment return for the 2025/26 tax year, even if you have started MTD for 2026/27.

What the Autumn Budget changed

Autumn Budget 2025 confirmed that MTD for IT will start in April 2026 as planned. It did not change the thresholds or timetable but introduced easements and clarified how the penalty system will apply.

The main changes are as follows:

• Soft landing for penalties
  If you are required to use MTD for IT from 6 April 2026, HMRC will not apply penalty points for late quarterly updates for the first 12 months, although late annual returns can still attract points.
• Extra time before late payment penalties
  All taxpayers in the new regime will have an additional 15 days before a late payment penalty is issued in their first year under the new system, creating a 30-day window to pay tax before penalties apply.
• Further deferrals and exemptions
  Some groups, such as those who receive trust and estates income, individuals who use averaging (for example, some farmers), those eligible for qualifying care relief and certain non-UK resident entertainers, will remain in standard self assessment until at least April 2027, with deputyship cases permanently exempt.

These measures aim to ease the transition without changing the core requirement for affected sole traders and landlords to be ready by April 2026.