Making Tax Digital for Income Tax: what sole traders and landlords need to do

You need to use it if all three of these are true. You are a sole trader or a landlord registered for Self Assessment. You get income from self-employment or from property, or from both. Your qualifying income is over the threshold for the tax year that decides your start date.

Partnerships will have to use it as well. HMRC has said it will set that timeline later, and it has not done so yet.

To sign up you must be registered for Self Assessment and you must have sent a tax return in the last two years. You still send a Self Assessment return for the tax year before you start.

Qualifying income is your total income from self-employment and property, before expenses. It is turnover, not profit. If you have more than one trade, or a trade and a rental property, you add them together.

GOV.UK's example is £25,000 of rental income plus £27,000 of self-employment income, which is £52,000 of qualifying income.

If you own a property jointly, your share of the income counts. GOV.UK's example: a property that brings in £50,000, owned equally with someone else, and no self-employment income, is £25,000 of qualifying income for you.

HMRC checks the Self Assessment return you sent for the earlier year, and writes if you are over the line. If the letter does not arrive, it is still your job to check. I would rather look at the return with you than guess from a turnover figure in conversation.

Once you have started, you can choose to opt out if your qualifying income stays under the relevant threshold for three tax years in a row.

Some people are exempt, for example if they are digitally excluded. An exemption does not remove the need to report the income. You still send a Self Assessment return. The check for an exemption is on GOV.UK.

You, or your agent, use software that works with Making Tax Digital for Income Tax. That software is how you keep the digital records, send the quarterly updates, and file the tax return.

The usual year follows the tax year, 6 April to 5 April. The deadlines are the same if you use calendar quarters because your accounts run to 31 March. You choose calendar quarters in the software before you send the first update. After that first update, you cannot switch for the rest of the year.

If you came in on 6 April 2026, the second update was due on 7 November 2026. The next ones are 7 February 2027 and 7 May 2027. Your 2025 to 2026 tax return is still filed the usual way, by 31 January 2027. The first return through the software is the 2026 to 2027 return, due by 31 January 2028.

I can check which year you start, set the records up in Xero, and keep them current. I send the quarterly updates and file the return through that software. It is agreed on its own. It is not part of the £150 bookkeeping fee. The longer account of the service is on the Making Tax Digital page, and there is a shorter local note for Market Harborough.