Do Landlords and Sole Traders Need to Use Making Tax Digital from April 2026?

Quick answer:
Yes, but only if your qualifying self-employment and/or property income is over £50,000. If you are below that level, you may not need to join yet, but lower thresholds will apply in later years.

From 6 April 2026, Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income above £50,000. The threshold then reduces to £30,000 from April 2027 and £20,000 from April 2028. GOV.UK has a tool to check if and when you need to use Making Tax Digital for Income Tax.

The important point is that this is based on income before expenses, not profit. So even if your taxable profit is much lower, you could still be caught by the rules.

What is changing?

Making Tax Digital, often called MTD, changes how affected landlords and sole traders report income to HMRC.

Instead of keeping records however you like and pulling everything together once a year, you will need to keep digital records and send quarterly updates to HMRC using compatible software. GOV.UK explains that quarterly updates are summaries, not tax returns, and must be sent every three months for each self-employment or property business.

For many people, the tax calculation itself may not change dramatically. The bigger change is the admin. Your records will need to be kept up to date during the year, rather than only being organised when the tax return deadline approaches.

Who is caught first?

The first group affected are individuals with qualifying income over £50,000.

This applies from 6 April 2026.

Qualifying income generally means gross income from:

self-employment;
UK property;
and other property income that falls within the MTD rules.

It does not include everything on your tax return. For example, dividends and other non-business income are not counted as qualifying income for this purpose.

Is the £50,000 based on profit?

No. This is one of the most common misunderstandings.

The threshold is based on gross qualifying income before expenses. So a landlord with £55,000 of rental income and £20,000 of expenses may only have £35,000 profit, but they could still fall within MTD because the income figure is over £50,000.

The same applies to sole traders. It is the business income before deducting costs that matters.

What if you have rental income and self-employment income?

You need to look at the combined total.

For example, someone with £31,000 of self-employment income and £23,000 of rental income would have total qualifying income of £54,000. That would put them within MTD from April 2026, even though neither source is over £50,000 on its own. A May 2026 document gives this same type of example and confirms that income from all relevant sources counts towards qualifying income.

This is why landlords with relatively modest rental income can still be caught if they also have self-employment income.

How does HMRC decide when you need to join?

HMRC looks back at the tax return submitted before the tax year starts.

For 2026/27, HMRC checks the 2024/25 tax return, which should have been submitted by 31 January 2026. If the qualifying income on that return is over £50,000, MTD applies from 6 April 2026.

For 2027/28, HMRC checks the 2025/26 tax return to see whether qualifying income is over £30,000.

For 2028/29, HMRC checks the 2026/27 tax return to see whether qualifying income is over £20,000.

What will you actually need to do?

Once you are within MTD, you will need to use software that works with HMRC’s system.

That software must allow you to keep digital records, send quarterly reports to HMRC, submit a finalisation statement after the end of the tax year and receive information from HMRC.

GOV.UK has guidance on using Making Tax Digital for Income Tax, including how to keep records and send updates.

What are quarterly updates?

Quarterly updates are summaries of your income and expenses for the period. They are not full tax returns.

A May 2026 document confirms that each update is a cumulative total of income and expenses for the tax year to date, and that each update must be submitted by the 7th of the month following the end of the relevant quarter.

GOV.UK also explains that your compatible software will create totals from your digital records and send those totals to HMRC.

Do landlords need to do anything different?

Landlords may find this change more disruptive than sole traders because many landlords only have a small number of transactions each month and may not currently use bookkeeping software.

Even where a letting agent manages the property, the landlord still needs to make sure records are kept digitally and quarterly updates are submitted where MTD applies. The May 2026 document confirms that landlords will be expected to keep digital records, even where properties are jointly owned, and submit quarterly updates online.

Jointly owned property also needs care. Where a property is jointly owned, each taxpayer usually includes their share of the gross property income when working out qualifying income.

Can you still use spreadsheets?

Possibly, but only if they are used as part of an MTD-compatible process. In practice, many people will move to bookkeeping software because it is easier to keep records and submit updates from one place.

GOV.UK has a page to help taxpayers find software that is compatible with Making Tax Digital for Income Tax.

The right software depends on the number of transactions, whether there is rental income, whether there is self-employment income, and how much support is needed from an accountant.

What should you do now?

The first step is to check your qualifying income.

Do not just look at your profit. Look at the gross income from self-employment and property before expenses.

The second step is to check which tax return HMRC will use to decide your start date. For 2026/27, the key return is 2024/25.

The third step is to decide how your records will be kept. Waiting until the first quarterly deadline is risky because you may need time to choose software, connect bank feeds, tidy up old records and agree who is doing what.

How can Merranti Accounting help?

Merranti Accounting can help you check whether MTD applies to you, review your qualifying income, choose suitable software, set up digital records and deal with quarterly submissions.

If you are a landlord, sole trader, or both, it is worth checking your position now rather than waiting for HMRC to contact you.

Speak to Merranti Accounting to check whether you need to use Making Tax Digital and to get your records ready before your first quarterly deadline.