Making Tax Digital for Income Tax: Key Dates, Impacts, and How Harkia Chartered Accountants Can Help

Are you a sole trader or landlord feeling overwhelmed by the upcoming changes to UK tax reporting? Don’t let Making Tax Digital (MTD) for Income Tax catch you off guard! From April 2026, HMRC’s digital revolution will transform how you manage your taxes. At Harkia Chartered Accountants, we’re here to guide you through every step, ensuring compliance and peace of mind. Read on to discover what MTD means for you, key deadlines, and how our expert team can make this transition seamless.

What is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) for Income Tax is HMRC’s initiative to modernise the UK tax system by moving it online. It requires sole traders and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using MTD-compatible software. This shift aims to reduce errors, improve efficiency, and provide real-time insights into your tax obligations.

For many, MTD represents a significant change in how taxes are managed. If you’re used to manual bookkeeping or annual tax returns, the move to digital record-keeping and regular updates may seem daunting. But with the right support, it’s an opportunity to streamline your finances and stay on top of your tax responsibilities.

Key Dates for MTD for Income Tax

The rollout of MTD for Income Tax is phased based on your total gross income from self-employment and property (before expenses). Here’s the timeline you need to know:

6 April 2026: MTD becomes mandatory for sole traders and landlords with total business or property income above £50,000 in the 2024-25 tax year. If your income exceeds this threshold, you’ll need to start using MTD-compliant software for digital record-keeping and quarterly submissions.

6 April 2027: The threshold lowers to £30,000, meaning those with income above this level in the 2025-26 tax year must comply.

6 April 2028: The threshold drops further to £20,000, capturing more sole traders and landlords in the 2026-27 tax year.

TBC: No date has been set for those with income of £20,000 or below, or for partnerships, but HMRC plans to include these groups eventually.

You can elect to use calendar quarters instead (ie, 30 June, 30 September, 31 December and 31 March). In this case you will need to join from the relevant 1 April rather than 6 April.

Voluntary Sign-Up: MTD is currently voluntary, and you can join early to test the system. Early adopters benefit from dedicated HMRC support and no penalties for missing quarterly deadlines during the testing phase.

Filing Deadlines: Under MTD, you’ll submit quarterly updates (aligned with calendar quarters if you choose) and a year-end final declaration by 31 January following the tax year. Tax payments are still due by 31 January, with no changes to payment schedules.

How MTD Affects Sole Traders and Landlords

MTD for Income Tax will impact sole traders and landlords in several ways:

Digital Record-Keeping: You must maintain digital records of all transactions (income and expenses) using MTD-compatible software or spreadsheets with bridging software. Each record should include the date, amount, and category (e.g., same categories as your Self-Assessment return). Records must be kept for five years after the tax return deadline.

Quarterly Updates: Instead of a single annual return, you’ll submit summaries of your income and expenses every quarter. This doesn’t change your tax liability but provides HMRC with regular updates.

Software Requirements: You’ll need reliable internet and MTD-compliant software. HMRC expects affordable and free software options for small businesses, similar to MTD for VAT. If you’re not tech-savvy, don’t worry—Harkia can recommend and set up the right tools for you.

Income Thresholds: Qualifying income includes gross income from self-employment and property (UK and overseas). For landlords, all UK properties count as one business, and overseas properties as another. Jointly held property income is apportioned based on your share.

Exemptions: Some may be exempt, e.g., those with specific religious beliefs or complex tax affairs. Check with Harkia to see if you qualify.

For sole traders, MTD means more frequent reporting, which can help you stay organised but requires new habits. Landlords, especially those with multiple properties, will need to consolidate records digitally, which could be time-consuming without professional support.

Why Choose Harkia Chartered Accountants?

At Harkia Chartered Accountants, we specialise in helping sole traders and landlords navigate the complexities of MTD for Income Tax. Our team is well-versed in HMRC’s requirements and MTD-compliant software, ensuring you’re prepared for the 2026 deadline and beyond. Here’s how we can help:

Tailored Software Solutions: We recommend and set up MTD-compatible software that suits your business, from simple apps to robust platforms.

Seamless Transition: We’ll guide you through moving from manual to digital record-keeping, training you or handling it entirely if preferred.

Compliance and Support: Our experts ensure your quarterly updates and year-end declarations are accurate and submitted on time, minimising the risk of penalties.

Personalised Advice: Whether you’re a sole trader with a side hustle or a landlord with a property portfolio, we provide bespoke tax planning to optimise your finances.

With offices in Leytonstone and the City of London, Harkia is your trusted partner for MTD compliance. Don’t let the digital tax revolution stress you out—let us handle the details so you can focus on your business.