Making Tax Digital for Income Tax (MTD for IT) is no longer just on the horizon — it's here. From April 2026, sole traders and landlords with qualifying income over £50,000 are legally required to use MTD-compatible software and submit quarterly updates to HMRC. More thresholds follow in the coming years.
If you're a Brighton business owner or landlord, here's exactly what's happening, what you need to do, and how we can help.
MTD for Income Tax replaces the traditional once-a-year Self Assessment tax return for those who are in scope. Instead of filing one return by January, you'll need to keep digital records throughout the year and submit four quarterly updates to HMRC via approved software — plus a final end-of-year declaration.
The aim is to make tax more accurate, reduce errors, and give HMRC a real-time view of your income. For business owners, it means staying more on top of your books throughout the year — which, honestly, is good practice regardless of the rules.
If your qualifying income is below the current threshold, you don't need to act yet — but it's worth preparing, as the thresholds will only drop further.
Qualifying income includes income from self-employment and property. It does not include employment income (PAYE), dividends, savings interest, or pension income. So if you're a director taking a salary and dividends from your limited company, MTD for IT doesn't apply to you under the current rules.
Look at your Self Assessment returns for the last two years. If your total income from self-employment and/or property is over £50,000, you're in scope from April 2026.
You must use HMRC-approved software to keep records and submit quarterly updates. Xero, QuickBooks, FreeAgent, and Sage are all approved. We can help you choose and set up the right one for your situation.
Paper records and spreadsheets alone won't meet MTD requirements. Your income and expenses must be kept digitally in approved software from the start of your first MTD period.
You'll submit four updates per year — roughly aligning with the quarters of the tax year. These aren't full tax returns; they're summaries of income and expenses. Your accountant can handle these for you.
At the end of the tax year, you'll submit a final declaration confirming your figures and including any additional information (gift aid, personal allowances, etc.). This replaces the traditional Self Assessment return.
For the 2026–27 tax year, HMRC has announced a soft launch — there will be no penalty points for late quarterly submissions. However, from 2027–28 onwards, a points-based penalty system applies: two missed deadlines in 24 months results in a £200 fine, with interest on late payments.
If you're in scope for MTD, we can handle the entire process for you. We'll set up your software, connect it to your bank, prepare your quarterly updates, and file your year-end declaration. You just need to keep your receipts in order — we'll do the rest.
If you're not sure whether you're in scope, or you want to get ahead of the 2027 threshold, give us a call or drop us a WhatsApp. A quick conversation is usually all it takes to work out where you stand.
We help Brighton sole traders and landlords navigate Making Tax Digital from start to finish. Get in touch for a free, no-obligation conversation.
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