Making Tax Digital for Income Tax: what UK landlords and sole traders need to do (2026-2028)

Written by the Quidtrail team · Facts last checked 18 October 2026

The short answer: if you're a sole trader or landlord and your combined gross income from self-employment and property is over £50,000, Making Tax Digital (MTD) for Income Tax has applied to you since 6 April 2026. If it's over £30,000 you start on 6 April 2027, and if it's over £20,000 you start on 6 April 2028. HMRC decides which group you're in from an earlier tax return. Once you're in, you have to keep digital records, send a summary to HMRC every three months and submit your tax return using compatible software (GOV.UK).

This guide covers who's affected, the key dates, what you'll have to do, what your software has to be able to do, and how to choose software, using HMRC's own guidance.

In this guide

• Who needs to use MTD for Income Tax
• Key dates 2026-2028
• How HMRC decides you're in scope
• Exemptions, including digital exclusion
• Jointly owned property
• What you have to do
• What compatible software must do
• How to choose MTD software (checklist)
• Penalties
• FAQs

Who needs to use Making Tax Digital for Income Tax?

You need to use MTD for Income Tax if all of these apply (GOV.UK):

• you're a sole trader or landlord registered for Self Assessment
• you get income from self-employment, property or both
• your qualifying income is over the threshold for the relevant tax year

Partnerships don't have to use it yet. HMRC says it will set out a timeline for them later (GOV.UK).

What counts as qualifying income?

Qualifying income is your total self-employment and property income before expenses, which is your turnover rather than your profit. It's based on the tax return you sent for the previous tax year. If you have more than one business or property, add them all together (GOV.UK).

HMRC's own example: £25,000 of rent plus £27,000 of self-employment income gives qualifying income of £52,000, even though neither figure is over £50,000 on its own (GOV.UK).

These don't count towards qualifying income (GOV.UK):

• employment (PAYE) income
• your share of profit from a partnership as an individual partner
• dividends, including from your own company
• State Pension and private pensions
• income from UK REITs or Property Authorised Investment Funds
• qualifying care relief, and basis period reform transition profits

UK-resident landlords count foreign property income as well. If you weren't UK tax resident, only UK property income and self-employment income declared on your UK return count (GOV.UK).

Key dates 2026-2028

Source: GOV.UK: Using MTD for Income Tax for the first time.

The £20,000 step alone is expected to bring in about 970,000 more sole traders and landlords (GOV.UK tax information and impact note). HMRC said that more than 864,000 people were already in scope ahead of the first quarterly deadline in August 2026 (GOV.UK press release).

Your first year, step by step

HMRC's first-year timetable for people starting in April 2026 (GOV.UK):

If you start in April 2027 or April 2028, the pattern is the same one year or two years later. The quarterly deadlines are always 7 August, 7 November, 7 February and 7 May, and the tax return is due by 31 January after the tax year ends. See our full MTD quarterly deadlines and update periods page for every date.

You still file a normal Self Assessment return for the year before you start. For example, if you start on 6 April 2026, your 2025 to 2026 return (due 31 January 2027) is filed the old way (GOV.UK).

How HMRC decides whether you're in scope

HMRC looks at your Self Assessment return each year. If your qualifying income is over the threshold, it writes to you to say you need to start by the beginning of the next tax year. For the April 2026 group, it used the 2024 to 2025 return (GOV.UK).

Two points worth knowing:

• No letter doesn't mean you're exempt. HMRC says it's still your responsibility to check and sign up (GOV.UK). HMRC has an online checker tool on that page.
• HMRC has started signing people up itself. From September 2026, HMRC began signing up people who need to use MTD for 2026 to 2027 but hadn't signed up. It uses only the information it already holds, which may be out of date (GOV.UK).

Other rules on how income is assessed (GOV.UK):

• New or part-year sole traders: HMRC "annualises" income. If you traded for 6 months, it doubles your income. Landlords have to annualise their property income themselves.
• Ceased income: if you stop one income source but keep another, the stopped one still counts. If all your self-employment and property income has stopped, tell HMRC before the next tax year starts, or you may be signed up anyway.
• Amended returns: an amendment made before a tax year starts can move you in or out of scope. An amendment made after the tax year starts can take you out, but it can't bring you in for that year.

To sign up you need to be registered for Self Assessment and to have submitted a tax return in the last 2 years. You use your existing Self Assessment sign-in details (GOV.UK).

Exemptions, including digital exclusion

If you're exempt, you don't use MTD but you still file a Self Assessment return as normal. Some exemptions are automatic and some you have to apply for. Some are permanent, unless your circumstances change, and some are temporary, lasting until at least April 2027 (GOV.UK).

Automatic and permanent, unless circumstances change:

• qualifying income of £20,000 or less
• no National Insurance number before the tax year starts
• personal representatives of someone who has died, and trusts filing an SA900
• people HMRC knows can't provide information because of physical or mental incapacity, where a power of attorney or legally appointed deputy is in place

Automatic until at least April 2027 (based on your 2024 to 2025 return): for example, if you claimed averaging relief as an individual (SA103), claimed qualifying care relief (foster or kinship carers), or included the SA107 (trusts) or SA109 (residence) pages. You'll still need MTD from 2027 to 2028 if your qualifying income is over £30,000 (GOV.UK).

Automatic beyond April 2027: ministers of religion (SA102M), Lloyd's members with self-employment or property income (SA103L), and people claiming Married Couple's Allowance or Blind Person's Allowance. HMRC will set a later timeline for these groups. HMRC's page also lists SA103L as a permanent exemption for a Lloyd's member's underwriting business (GOV.UK).

Partners claiming averaging relief on the SA104 page have to apply for the temporary exemption. It isn't automatic (GOV.UK, updated 28 May 2026).

Digitally excluded

You may be digitally excluded if it isn't reasonable for you to use software to keep digital records or file. For example, your age, health or disability may stop you using a computer, tablet or phone. You may belong to a religious society whose beliefs are incompatible with digital communications. Or you may be unable to get internet access at home, at work or anywhere suitable (GOV.UK).

HMRC won't accept an application if your only reason is that you used to file on paper, you aren't familiar with accounting software, you have only a few records, or it will cost you time or money (GOV.UK).

When to apply: if you start in 2026 or 2027, you can apply now. If you start in April 2028, HMRC says to apply from summer 2027 onwards (GOV.UK).

Jointly owned property

Only your share of the income counts. HMRC's example: a property owned equally with a sibling brings in £50,000, so your qualifying income from it is £25,000. If you're only ever told your share after expenses, HMRC uses that net figure (GOV.UK).

Joint landlords also get some easier record-keeping options (GOV.UK):

• you only record your share of the income and expenses
• you can keep less detailed records, such as one rent figure per quarter instead of one per month
• you can leave joint-property expenses out of the quarterly updates and add them at the end of the year by resending your fourth update, but properties you own outright still need expenses every quarter (GOV.UK)
• you don't need to link your records with the other owner's

See our MTD for jointly owned property guide.

What you have to do

1. Choose software and sign up

HMRC says to choose software before you sign up (GOV.UK). Then sign up, or ask your agent to sign you up, and authorise the software so it connects to HMRC. You have to reconnect every 18 months (GOV.UK).

2. Keep digital records

For self-employment and property income and expenses, each record needs the amount, date and category, using the same categories as Self Assessment. Keep your supporting documents as well, and keep digital records for at least 5 years after the 31 January deadline (GOV.UK).

Some simplifications apply:

• If turnover from a business is under £90,000, you can categorise more simply. Sole traders only need to mark each item as income or expense. Residential landlords also have to flag restricted finance costs, such as mortgage interest.
• All your UK properties count as one UK property business, so you don't need separate records for each property. Foreign property needs records for each property but is reported as one business.
• If you have more than one sole-trader business, each one needs separate records and separate updates.

3. Send quarterly updates

Every 3 months your software adds up your records into a summary, which isn't a tax return. You send one for each business, including when you have nothing to report. Each update covers the tax year so far. You don't need to make accounting adjustments for the updates (GOV.UK). After each one, you can see an estimate of your tax bill so far.

4. Submit your tax return using your software

After the year ends, you make any adjustments, add other income (savings, dividends, partnership shares and so on), claim reliefs and allowances, check the calculation and submit your return using your software by 31 January. HMRC adds information it already holds, such as PAYE, pensions and student loan plan type (GOV.UK). This step used to be called the "final declaration". HMRC's current guidance calls it submitting your tax return.

What doesn't change: you still pay your tax the same way and on the same dates (GOV.UK). For most people that means 31 January, plus a payment on account on 31 July if it applies (GOV.UK).

What compatible software must do

HMRC doesn't provide its own software. You, or your agent, need commercial software that can (GOV.UK):

1. create, store and correct digital records of your self-employment and property income and expenses
2. send quarterly updates to HMRC
3. add your other income sources and submit your tax return by 31 January after the tax year

HMRC also says the product or products you choose must:

• support all your MTD income sources: self-employment, UK property and foreign property
• let you make both kinds of submission, quarterly updates and the tax return
• let you report all your other income on the return. That includes a partnership profit share, which you don't need digital records for but which still goes on the return (GOV.UK)
• work with your accounting period: standard tax year, calendar update periods or neither

Two types of software

• Software that creates records. It imports transactions through a bank feed, scans receipts or lets you type entries in, and usually does everything, including updates and the tax return.
• Software that connects to your existing records, often called bridging software. It links to your spreadsheets or other tools and makes the submissions. Some bridging products can submit the tax return as well as the quarterly updates (GOV.UK).

Using more than one product

You can use more than one product, but only one product for each separate submission. A landlord can't split their property quarterly updates across two products (GOV.UK). If you use several products, your records have to be digitally linked, for example through linked spreadsheet cells, CSV import or export, or an API. Once a record has been sent in an update, you mustn't copy and paste it or retype it into other software (GOV.UK).

How to choose MTD software: a neutral checklist

We haven't tested any MTD software yet. This checklist is based on HMRC's guidance on what software must do, not on our own use of any product. Use it to narrow down your options, then check the details with each provider.

1. Is it on HMRC's list? Start with HMRC's software finder tool. HMRC says all the software it lists has passed its recognition process, but HMRC doesn't recommend any product (GOV.UK). The tool asks about your income sources, other income, whether you want to create new records or connect existing ones, and your accounting period.

2. Does it cover every income type you have?

• Self-employment, and more than one trade if you have them
• UK property, and jointly owned property, including your-share-only records and leaving expenses until the year end
• Foreign property, if you have it
• Other income on the tax return: savings, dividends, partnership profit share, pensions
• Income you might have in future. HMRC suggests checking this, for example if you're a landlord thinking of starting a business (GOV.UK)

3. Does it do the whole job or just part of it? Check that it sends quarterly updates and submits the tax return. If it only does one, you'll need a second product that works with it.

4. Bridging or full accounting software?

• Happy with spreadsheets? A bridging product may be enough. Check whether it handles the tax return as well.
• Want automatic bookkeeping? Look at full record-keeping software. See Can I keep using spreadsheets for MTD?

5. Bank feeds and receipt capture These save typing, but HMRC warns that a bank feed may not show every transaction in full, and you're responsible for checking that records are accurate and categorised (GOV.UK).

6. Accounting period support Standard update periods (6 April to 5 July and so on) are the default. If your books run from 1 April to 31 March, you can opt for calendar update periods, so check that the software supports them. You have to choose them before your first update (GOV.UK; HMRC manual SALF1160).

7. Agent access You can have one main agent, who can submit your tax return, and supporting agents, such as a bookkeeper doing your quarterly updates (GOV.UK). HMRC suggests checking whether the software allows multiple agents, and asking your accountant which software they can support (GOV.UK).

8. HMRC Assist HMRC lists this as something to look for. It gives feedback and highlights possible errors in your tax return (GOV.UK).

9. VAT If you're VAT-registered, check whether your current MTD for VAT software also covers Income Tax (GOV.UK).

10. Price, and whether free options are enough Free products exist for simple tax affairs but may have limits, such as a cap on transactions (GOV.UK). Compare the price over a full year, including the tax return month, and not just the introductory offer. See MTD software costs for providers' stated prices, with the date we checked.

11. Changing later You can switch at any time, but HMRC says it may be easier at the end of the tax year. Check that you can export your records, because you have to keep them for at least 5 years (GOV.UK).

More on software choice

These are neutral guides with no rankings. Where we list products, we use what the providers' own pages say, with the date we checked.

• Free MTD software: what to check
• How much does MTD software cost?
• Spreadsheets and bridging software
• MTD for landlords · MTD for sole traders

Penalties

New penalties replace the old Self Assessment late filing and late payment penalties from the tax year you join MTD (GOV.UK).

Late submission (points):

• You get one point for each missed deadline, and only one per deadline even if you have several businesses.
• At 4 points you get a £200 penalty, and another £200 for each later missed deadline.
• No points for late quarterly updates in 2026 to 2027. Points still apply to a late tax return. You also have to send all the updates before your software will let you submit the return (GOV.UK).
• Points expire after 24 months if you stay under the threshold.

Late payment (on balancing payments, not payments on account) (GOV.UK):

In your first year you have 30 days before late payment penalties start. Late payment interest is charged from day one. You can avoid penalties if you agree a payment plan with HMRC and keep to it (GOV.UK).

See our MTD penalties guide and the new Self Assessment penalties from April 2027.

Can you leave MTD later?

Yes, in some cases. You can opt out if your qualifying income stays below the threshold for 3 tax years in a row, or if an amended return takes you below it. If you're exempt, or you opt out, you go back to filing a normal Self Assessment return (GOV.UK).