All change for landlords and self-employed traders
After more than a decade in development, Making Tax Digital for Income Tax (MTD IT) is finally becoming a reality.
From 6 April 2026, thousands of taxpayers will be required to comply—and for many, this will represent a significant increase in administrative workload.
If you’re self-employed or have rental income, now is the time to understand what’s coming and how it will affect you.
Who needs to comply with MTD IT from April 2026?
The first group affected are individuals with:
- Combined turnover over £50,000
- From self-employment and/or property income
- Based on their 2024/25 tax return
If you fall into this category, you will be mandated into MTD IT from 6 April 2026.
Further groups will follow:
- £30,000+ turnover → from April 2027
What does MTD IT actually require?
Under MTD IT, you will need to:
1. Keep digital records
Manual records or spreadsheets alone will no longer be sufficient—you must use MTD-compatible software.
2. Submit quarterly updates
You will need to report income and expenses to HMRC four times a year:
- 5 July
- 5 October
- 5 January
- 5 April
These deadlines apply regardless of your accounting year-end.
3. Submit a final declaration
At the end of the tax year, you must submit a finalisation statement by 31 January following the tax year.
A transitional headache: Two systems in one year
If you are mandated from April 2026, you will face an unusual situation:
- You must still file your 2025/26 tax return (under the old system) by 31 January 2027
- While also complying with MTD IT reporting for 2026/27
This means:
You will be dealing with two different tax reporting systems at the same time
Low adoption so far – but time is running out
HMRC has started issuing letters to affected taxpayers—but many individuals have not yet received notification.
Despite this:
- Only a small proportion of eligible taxpayers have signed up so far
- Awareness remains low
This creates a risk that many will leave preparation too late.
Good news: No penalties in the first year
The Autumn Budget confirmed that:
- There will be no late filing penalties in the first year (2026/27)
However:
- This is only a temporary relaxation
- Later groups (e.g. those joining from 2027/28) will not benefit from this leniency
Why MTD IT matters more than you think
MTD IT is not just a reporting change—it fundamentally alters how you manage your finances.
You will need to:
- Maintain accurate, up-to-date records throughout the year
- Use compliant software
- Submit information regularly rather than annually
For many, this will mean:
- Increased admin time
- Higher compliance costs
- Greater risk of errors if systems are not in place
Practical steps to prepare now
If you think you may be affected, you should act early.
Start by:
- Reviewing your 2024/25 turnover
- Identifying whether you will fall into MTD from April 2026
- Moving to digital bookkeeping software
- Getting familiar with quarterly reporting requirements
Don’t overlook other tax changes
While MTD IT is a major development, it’s not the only change coming.
Businesses and individuals should also be aware of:
- Changes to corporation tax rules (e.g. shareholder loans)
- Rising tax rates on dividends and savings income
- Payroll changes, including National Living Wage increases and student loan updates
- Ongoing HMRC scrutiny in areas like VAT and CGT
Final thoughts: Early action is essential
MTD IT represents one of the biggest changes to the UK tax system in recent years.
Although implementation has been delayed multiple times, it is now firmly happening.
Those who prepare early will find the transition manageable—those who don’t may struggle.
Need help getting ready for MTD ITSA?
At Merranti Accounting, we help clients:
- Prepare for Making Tax Digital
- Set up compliant systems
- Manage ongoing reporting requirements
If you’re unsure whether MTD IT applies to you—or want help getting set up—get in touch with our team today.
Read more from our spring news letter here
