The UK government’s call for digitalising the taxation system came up in a programme named Making Tax Digital (MTD). This initiative by the UK government aims to make fundamental changes in how the tax system works.
HMRC’s main purpose with this initiative is to transform the tax system to become more effective, streamlined, and easier for businesses and individuals to follow.
MTD for landlords and sole traders will now become mandatory from April 6, 2026, not 2024 as originally planned.
The rollout will be phased starting with those earning over £50,000, followed by those earning over £30,000 from April 2027.
So, what are your doubts regarding it? We have summarised some frequently asked questions in this blog to help you prepare and file your taxes more easily.
Frequently Asked Questions About MTD For Landlords and Sole Traders
What are the requirements related to MTD for landlords and sole traders?
You will be required to operate MTD from April 6, 2026, for your trading and property income chargeable to Income Tax and Class 4 NICs if your gross income from these income sources exceeds £50,000.
Those with income above £30,000 will join from April 2027.
You will need to:
- Maintain your records digitally (for ITSA purposes).
- Provide quarterly digital updates and annual final declarations to HMRC through MTD-compatible software.
Here are the specific requirements mentioned under ITSA regulations for landlords and sole traders:
- You (or your authorised agent) must keep and preserve tax records electronically and submit reports to HMRC using approved software.
- Each tax year requires submitting digital reports detailing your trading or property income, allowable expenses, and any claims for reliefs or allowances.
You can find more details on the official GOV.UK MTD ITSA page.
When will landlords and sole traders need to join MTD in absolute terms?
MTD for ITSA, also called MTD for Landlords and Sole Traders, will now apply as follows:
- From April 6, 2026: Self-employed individuals and landlords with income above £50,000.
- From April 6, 2027: Self-employed individuals and landlords with income above £30,000.
The earlier plan for April 2024 was postponed to allow more time for businesses to prepare. Partnerships will be included later, though HMRC hasn’t yet confirmed a date.
What are the filing deadlines for Making Tax Digital for landlords under ITSA?
The quarterly reporting deadlines for unincorporated businesses submitting under MTD for Landlords and Sole Traders will be:
August 5, November 5, February 5, and May 5.
These deadlines will apply once the new system starts in April 2026.
For example, a business with a 31 March accounting year end will need to file its first MTD update by 5 August 2026.
What is a Discovery Assessment?
A “discovery assessment” may be issued by HMRC if they identify a loss of tax for a tax year.
If a taxpayer has filed a return for that year, HMRC may issue a discovery assessment when:
- The taxpayer (or someone acting for them) was careless or intentional in under-reporting income.
- Based on the information initially available, HMRC couldn’t reasonably have known about the underassessment.
A discovery assessment can generally be made up to four years after the end of the tax year, or up to six years if due to carelessness, and twenty years for deliberate errors or failures to notify.2-year time restrictions are applicable if the loss of tax was due to either an error made despite reasonable care being taken or a failure to take reasonable care.
To Sum It Up
MTD for ITSA will follow the successful implementation of MTD for VAT, which is already mandatory for all VAT-registered businesses since April 2022.
If you’re a landlord or sole trader, 2025 is your preparation year the right time to:
- Choose MTD-compatible software,
- Digitise your financial records, and
- Join the MTD pilot if possible to familiarise yourself with the system before April 2026.
For official details, refer to HMRC’s Making Tax Digital for Income Tax guidance.
Parul is a dedicated writer and expert in the accounting industry, known for her insightful and well researched content. Her writing covers a wide range of topics, including tax regulations, financial reporting standards, and best practices for compliance. She is committed to producing content that not only informs but also empowers readers to make informed decisions.