Making Tax Digital for Income Tax
What landlords and the self-employed need to know about MTD before April 2026
Making Tax Digital (MTD) for Income Tax is set to roll out in April 2026. If you're self-employed or a landlord earning over £50,000 a year, you’ll be among the first to switch from annual tax returns to quarterly digital updates. It might sound like a big shift, but with the right tools and a bit of preparation, it can actually make your finances easier to manage.
Here’s what’s changing – and how to get ahead of it.
Who is affected by MTD for Income Tax?
From April 2026, MTD for Income Tax applies to
- Self-employed individuals
- Landlords
- With combined business and/or property income over £50,000
The threshold drops to £30,000 from April 2027, so even if you’re under the £50,000 mark now, it’s worth understanding what’s coming.
What will change from April 2026?
MTD replaces the traditional Self Assessment process for those affected. Instead of sending one tax return each year, you’ll
- Keep digital records of income and expenses
- Submit quarterly updates to HMRC using approved software
- Send an end-of-period statement and a final declaration after the tax year ends
It means more frequent reporting, but less end-of-year panic.
How to prepare for MTD now
Use cloud accounting software
Platforms like Xero, QuickBooks, and FreeAgent make it easier to track your income, log your expenses, and submit updates directly to HMRC. They’re built for digital compliance and can save you time and stress.
Keep real-time digital records
Instead of collecting receipts in a shoebox, start recording income and expenses as they happen. Most cloud tools let you scan receipts, categorise spending, and track mileage – all from your phone.
Understand quarterly reporting
Under MTD, you’ll send HMRC an update every three months showing your business income and expenses. These aren’t full tax returns, but they do need to be accurate. You’ll still finalise your tax position with an end-of-year statement and declaration, but the regular updates help keep things on track.
Common MTD mistakes to avoid
Getting MTD-ready doesn’t need to be difficult – but there are a few pitfalls that could trip you up if you’re not prepared. Here’s what to watch out for –
Waiting until 2026 to get started
Leaving it until the last minute means you’ll have to get used to new software, new processes, and a new reporting schedule all at once – under pressure. Give yourself time to learn and adapt now, while there’s no stress or risk of penalties.
Using outdated software that doesn’t meet HMRC’s requirements
Not all bookkeeping tools are MTD-compliant. You’ll need software that links directly to HMRC and supports quarterly submissions. Using the wrong platform could mean your data isn’t accepted – or worse, that you have to redo everything manually.
Misunderstanding what counts as income or allowable expenses
Accurate reporting depends on accurate records. If you’re unsure about what to include – or what you can claim for – your updates could be wrong. That risks either overpaying tax or being penalised for underreporting. It’s worth getting clear on the rules now.
Forgetting to submit quarterly updates
Under MTD, you’ll need to send updates every three months. Miss a deadline and you may face penalties, even if your figures are accurate. Setting reminders or using software that notifies you in advance will help you stay on track.
Talk to us today about getting MTD-ready
We’re already helping clients prepare for MTD. From choosing the right software to setting up real-time bookkeeping, Liondaris can support you every step of the way. We’ll make sure you’re compliant, confident, and fully ready for 2026.
We’ll help you find the right tools and set up simple processes that make quarterly reporting easy. Preparing now means fewer headaches later.