Making Tax Digital – Self Employment and Property Income

Making Tax Digital (MTD) is a major change to how sole traders and landlords report income to HMRC. From April 2026, many individuals will be required to keep digital records and submit quarterly updates using compatible software.

Who must use MTD?

• Are sole traders or landlords
• Are registered for Self Assessment
• Have qualifying income (combined self-employment and property income) over:
  • £50,000 for the tax year ending 31 March 2025 (mandatory from April 2026)
  • £30,000 for the tax year ending 31 March 2026 (mandatory from April 2027)
  • £20,000 for the tax year ending 31 March 2027 (planned for April 2028)

Note: MTD does not apply to limited companies, charities, or partnerships at this stage.

What changes under MTD?

• You’ll submit quarterly income and expenditure reports instead of one annual tax return.
• These reports are due for quarters ending:
  • 30 June – due by 7 August
  • 30 September – due by 7 November
  • 31 December – due by 7 February
  • 31 March – due by 7 May
  • Final submission agreeing with your self assessment figures – by following 31 January.
• Each submission is for the accumulated income and expenditure since 1 April each year.
• You’ll still submit a final tax return by 31 January following each tax year.
• Tax payment deadlines remain unchanged for the time being.

What you will need to submit

Each quarterly update includes an income and expenditure account — not a balance sheet. You can submit on a cash basis, but we recommend using normal management accounts (recording income and costs when incurred) for better accuracy.

Green Accountancy clients can choose to either:

1. Have Green Accountancy check and submit the quarterly returns:
   • If we prepare your VAT return already, the additional fee will be £20+VAT per month.
   • If currently we don’t prepare quarterly figures for you, the additional fee will be around £50+VAT per month.
2. Submit your own MTD figures quarterly.  We can still prepare your year end income and expenditure account as part of your self assessment return.

Software requirements

To comply with MTD, you must use HMRC-recognised software. At Green Accountancy, we require clients to use Xero, which:

• Connects to your bank via a live bank feed
• Makes record-keeping simple and accurate
• Starts from just £7 + VAT per month

Get ready now

To ensure a smooth transition by 1 April 2026, we recommend:

1. You must have dedicated bank accounts
   • One for self-employment income
   • One for letting income
2. Set up Xero now
   Start using it for current transactions or backfill from 1 April 2025 to have the full tax year ready.This helps keep your records clean and simplifies quarterly reporting.

Why MTD matters

HMRC is introducing MTD to:

• Reduce errors in tax reporting
• Save time and improve accuracy
• Help taxpayers better understand and manage their tax obligation

Quarterly updates will also give you estimated tax bills, helping you plan ahead.

Need help?

We’re here to guide you through every step of MTD setup and compliance including registration with HMRC for MTD.