Making Tax Digital for Income Tax 2026: What Sole Traders and Landlords Need to Know?

Making Tax Digital is changing the way many self-employed people and landlords manage and report their income to HMRC.

From 6 April 2026, Making Tax Digital for Income Tax applies to qualifying sole traders and landlords with gross self-employment and property income above £50,000. Those affected need to keep digital records and use MTD-compatible software to meet their reporting requirements.

If you are already within MTD, or HMRC has contacted you about Making Tax Digital, it is important to make sure your bookkeeping and accounting systems are set up correctly.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax, often shortened to MTD, is part of HMRC's move towards a more digital tax system.Instead of relying primarily on records being brought together at the end of the tax year, people within MTD need to maintain appropriate digital records throughout the year using compatible software.

For many sole traders and landlords, this means moving away from spreadsheets, paper records or irregular bookkeeping and adopting a more structured digital bookkeeping process.

Making Tax Digital for Self-Employed Sole Traders

Making Tax Digital for self-employed people is being introduced in stages.

From April 2026, qualifying income above £50,000 brings individuals within MTD for Income Tax. The threshold is scheduled to reduce to £30,000 from April 2027 and £20,000 from April 2028.

If you are already required to use MTD, you should make sure your business transactions are being recorded digitally and your bookkeeping is kept accurate and up to date.

This is particularly important if you have previously dealt with your accounts mainly around the Self Assessment deadline.

MTD for Landlords: Making Tax Digital and Property Income

Making Tax Digital for landlords is also part of MTD for Income Tax.

If you receive qualifying property income, you may need to maintain digital records and use Making Tax Digital software to meet your obligations.

Importantly, HMRC considers qualifying income from self-employment and property together when determining whether you meet the relevant MTD income threshold.

This means someone operating a small business while also receiving rental income should consider both sources rather than looking at each one separately.

HMRC Has Signed Me Up for MTD, What Should I Do?

From September 2026, HMRC began automatically signing up certain people who should already be using Making Tax Digital for Income Tax but had not signed themselves up.

If you have received communication from HMRC about Making Tax Digital, don't leave it until the next tax deadline.

Check whether MTD applies to you, make sure your bookkeeping records are up to date and establish whether your existing accounting software is MTD compatible.

Getting the system organised now can make ongoing compliance much easier than trying to correct incomplete records later.

What MTD Software Do I Need?

People within MTD need to use MTD-compatible software that can meet HMRC's requirements.

Accounting platforms such as Xero and FreeAgent can be used as part of an MTD-compliant bookkeeping system when appropriately configured.

However, choosing Making Tax Digital software is only one part of the process. Your transactions still need to be recorded correctly, bank accounts reconciled and digital records maintained throughout the year. Good bookkeeping therefore becomes increasingly important under MTD.

Need Help With Making Tax Digital?

Vau Consult provides Making Tax Digital, bookkeeping and accounting support for sole traders, landlords and small businesses across the UK. We can help you organise your bookkeeping, set up MTD-compatible software, maintain accurate digital records and manage your ongoing Making Tax Digital requirements using platforms including Xero and FreeAgent.

If HMRC has contacted you about MTD, or you are unsure what Making Tax Digital means for your business or property income, we can help you understand what you need to do next.

Need help getting ready for MTD? Get a quote from Vau Consult.