Making Tax Digital (MTD) for Income Tax is being introduced in stages, and the next group of taxpayers will need to comply from 6 April 2027.
For landlords and sole traders, this means changes to how income and expenses are recorded and reported to HMRC. If you haven’t already started preparing, now is a good time.
Who will be affected from April 2027?
The next phase generally applies to landlords and sole traders whose qualifying income exceeded £30,000 in the 2025/26 tax year. Importantly, qualifying income is based on gross income before expenses are deducted. If you receive income from both self-employment and property lettings, those amounts are combined when determining whether you meet the threshold.
Certain exemptions apply, so it’s important to check your individual circumstances.
What will change?
Under MTD, affected taxpayers will need to maintain digital records of their income and expenses using compatible software. They’ll also be required to send quarterly updates to HMRC and complete their annual tax return through MTD-compatible software. For anyone currently relying on manual bookkeeping, paper records or year-end spreadsheets, this could mean a considerable change to their processes.
Why prepare now?
Getting started early gives you time to review your existing records, choose suitable software and establish a bookkeeping routine that works for you.
It’s also an opportunity to improve how you manage your finances throughout the year, rather than gathering everything together when your tax return is due.
How can Progress Accountants help?
We can help you establish whether MTD applies to you, choose suitable software and prepare your bookkeeping processes ahead of the deadline.
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