Making Tax Digital (MTD) 2026: Everything Sole Traders & Landlords Need to Know

Making Tax Digital for Income Tax is mandatory from April 2026 for sole traders and landlords earning over £50,000. This guide explains what MTD means, who it affects, what software you need, and how Accounted4Tax makes the switch completely stress-free — from registration to quarterly submissions.

What Is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is HMRC's plan to move the entire UK tax system fully online. Rather than filing one annual Self Assessment tax return, you will be required to submit a summary of your income and expenses to HMRC four times a year — every quarter — using HMRC-approved software.

MTD for Income Tax is one of the biggest changes to UK tax in decades. But with the right accountant supporting you, it is completely manageable — and Accounted4Tax makes the transition simple from day one.

Who Does MTD for Income Tax Affect?

MTD for Income Tax applies to sole traders and landlords whose total annual income exceeds the following thresholds:

• From April 2026 — sole traders and landlords earning over £50,000

• From April 2027 — those earning over £30,000

• From April 2028 — those earning over £20,000

If your income is currently below the threshold, you are not yet required to join — but you can volunteer to sign up early. Many of our clients choose to do so to avoid the last-minute rush and get comfortable with the new process before it becomes mandatory.

What Does MTD Actually Mean Day to Day?

Under Making Tax Digital for Income Tax, you will need to do the following throughout the year:

• Keep digital records of all your business income and expenses using HMRC-approved software

• Submit a quarterly update to HMRC every three months — four times per year

• Submit a Final Declaration at the end of the tax year, which replaces your annual Self Assessment tax return

• Ensure all records and submissions are made through compatible software

On our Essential and Full Service MTD plans, Accounted4Tax handles every quarterly submission and your year-end Final Declaration for you. You simply review and approve — we do the rest.

What Software Do You Need for MTD?

You cannot use spreadsheets or paper records for MTD — HMRC requires you to use approved MTD-compatible accounting software. The software must be capable of keeping digital records and submitting quarterly updates directly to HMRC.

At Accounted4Tax, we work with Xero, QuickBooks, FreeAgent and Nomi. All our MTD plans include accounting software as standard — we choose the right tool for your situation, set it up, configure it, and walk you through how to use it. You do not need to research or compare software options yourself.

What Replaces My Annual Self Assessment Tax Return?

Under MTD, your annual Self Assessment tax return is replaced by a Final Declaration — submitted once at the end of the tax year, after 5th April. This pulls together all four quarterly updates you have made throughout the year, plus any additional income sources, and confirms your total tax liability.

The quarterly updates themselves are summaries of your income and expenses for that three-month period — they are less detailed than a full tax return. However, accuracy still matters enormously. HMRC will use these updates to estimate your tax throughout the year.

What Happens If I Miss an MTD Quarterly Deadline?

HMRC uses a points-based penalty system for MTD for Income Tax. Each missed quarterly submission adds one penalty point to your record. Once you accumulate four penalty points, HMRC issues a £200 financial penalty. Further missed submissions result in further penalties.

At Accounted4Tax, we track every quarterly deadline for every client and submit on time — every time. You will never accumulate a penalty point with us managing your MTD submissions.

Our MTD Plans — Simple, Fixed-Fee Pricing

We offer three MTD plans designed for different types of clients:

• Starter — £24/month: MTD registration with HMRC, accounting software provided and set up, onboarding call, quarterly submission reminders, email support, access to your client portal

• Essential — £34/month (most popular): Everything in Starter, plus our accountants review and submit every quarterly update on your behalf, Annual Final Declaration included, WhatsApp and phone support, dedicated account manager, quarterly tax savings review

• Full Service — £54/month: Everything in Essential, plus full bookkeeping and bank reconciliation, expense categorisation, VAT returns where applicable, quarterly tax planning call, priority support — we handle absolutely everything

We also offer one-off MTD services — MTD registration only from £49, software setup and training from £99, a single quarterly submission from £49, and a Full MTD Setup Package for £199.

Is MTD Only for Income Tax?

No — MTD for VAT is already mandatory for all VAT-registered businesses. If you are VAT-registered and not yet filing under MTD for VAT, you need to act immediately. Accounted4Tax can register you and bring you into full compliance quickly.

MTD for Corporation Tax — which will affect limited companies — is also expected in the coming years, though no mandatory date has been confirmed yet.

Do Not Leave MTD to the Last Minute

Accountants are getting booked up fast ahead of April 2026. The earlier you get started, the smoother and more stress-free your transition will be. Book your free consultation with Accounted4Tax today — call us on 07563 811938, WhatsApp us, or book online.