Making Tax Digital (MTD) for Income Tax (IT) means that sole traders and landlords will have to start keeping digital records and submitting quarterly income and expenditure returns to HMRC from your online software. Then also submit an annual year end return, declaring other sources of income and gains.

The start date for this depends on your income level for the 2024/25 tax year. Therefore, sole traders and landlords with income/sales – NOT PROFIT over £50,000 need to register and start from April 2026, over £30,000 April 2027 and £20,000 April 2028.

Action needed:

  1. Complete your 2024/25 tax return, so you know your income level, therefore you can work out your start date for MTD for IT.
  2. Make sure you have a separate bank account for your business/rental income, and any Direct Debits etc, are changed to be taken from your business account, to ensure all income and expenditure related to your sole trade or rental are from the one bank account.
  3. Decide on which software you will use -we recommend using Xero.
  4. We can help you with setting up a licence for Xero and provide training on how to get going!
  5. Keep on top of your book-keeping, and remember we are at the end of the phone! Using online software, means we can log in and look if you are unsure about anything.
  6. Submit the 4 quarterly income and expenditure returns – on time! Remember no accounting adjustments need to be completed each quarter, and not payment of tax is required, but if you want us to check before you hit submit – let us know!
  7. When all 4 submissions are complete, provide us with any other details of income and gains for the year and we can complete your end of year Return – like your current Self-Assessment Tax Return.

We highly recommend looking at this in plenty of time, so that you can register for MTD and we can help with training and setting up the new software, making sure you are comfortable using this before MTD for IT goes ‘live’ on 6 April 2026.

This is a significant change for sole traders and landlords, and we are here to help you! If you have any queries, please get in touch.