For landlords and sole traders bringing in qualifying annual income over £50,000 (not including profit or dividends), Making Tax Digital (MTD) for Income Tax is now mandatory.
For income to qualify, it must be earned from self-employment or property rental, exceed the threshold in a tax year and be subject to UK Income Tax.
Please note that the total income is calculated before deducting expenses, tax or allowances.
Important dates to remember
HMRC requires quarterly updates to be submitted one month after the end of each period.
For a standard tax year, the deadlines fall on:
- 7 August
- 7 November
- 7 February
- 7 May
How to stay compliant
To stay compliant, you should take each of the following steps:
- Check your income level to see if you exceed the £50,000 threshold.
- Choose which MTD compliant software to use.
- Test your reporting processes to identify any potential issues and resolve them accordingly.
- Submit quarterly updates of your income and expenses to HMRC.
- Keep digital records.
- Submit a final declaration by 31 January following the tax year end.
MTD for Income Tax will be compulsory for landlords and sole traders whose qualifying income exceeds £30,000 from April 2027 and will be expanded further to landlords and sole traders with qualifying income that exceeds £20,000 in April 2028.
If you are unsure whether you are affected by this first phase of MTD for Income Tax or have any questions about your compliance requirements, speak to our experts.
