The UK tax landscape is about to undergo one of its most significant changes in recent decades: Making Tax Digital (MTD) for Income Tax Self-Assessment goes live in April 2026 for thousands of sole traders and landlords in London and across the country. Preparing now will help ensure a smooth transition, so your business can avoid penalties and benefit from streamlined record-keeping and tax submissions.

What is Making Tax Digital (MTD) for Income Tax?

Making Tax Digital (MTD) is a HMRC initiative to modernise the tax system, eliminate paper records, and bring reporting closer to real-time. Under MTD for Income Tax, businesses and landlords will need to keep digital records using approved software, submit quarterly summaries to HMRC, and provide a final annual declaration instead of the traditional Self Assessment tax return.

The move is designed to reduce errors, increase accuracy, and give taxpayers and HMRC a clearer, up-to-date picture of financial affairs.

Who Must Comply – Key Dates and Thresholds

The rollout is staggered, so the date you need to comply depends on your qualifying income (combined turnover from self-employment and/or property, before expenses):

From 6 April 2026: If your qualifying gross income for the 2024/25 tax year is over £50,000, MTD is mandatory from this date.
From 6 April 2027: If your qualifying gross income for the 2025/26 tax year is over £30,000, you must join MTD that year.
From 6 April 2028: For those with combined income over £20,000, compliance begins. This is the lowest planned threshold and will ultimately include most sole traders and smaller landlords in London.

Note: The turnover test considers combined self-employment and property income, including overseas property. For example, a London business owner with £32,000 in trading sales and £21,000 rental income qualifies for MTD by April 2026 even if the individual sources don’t exceed the threshold independently. Partnerships join at a later date – timeline to be confirmed.

Core Requirements: What Will Change?

Businesses and landlords impacted by MTD for Income Tax must:

Maintain digital accounting records using HMRC-approved software (such as Sage, QuickBooks, Xero, or FreeAgent).
Submit quarterly updates summarising income and expenses for each period (April–June, July–September, October–December, January–March).
Make an annual final declaration after the tax year ends – essentially replacing the traditional Self Assessment tax return, and due by the standard deadline (31 January).
Digital-only submissions: Manual entry on HMRC’s website or paper returns will no longer be accepted for those qualifying under MTD.
Keep records for all tax categories that apply (such as business expenses, rents, trading income).

Data security, accuracy, and timeliness will all become more important as submissions move “closer to real-time.” This is intended to reduce errors and improve the tax system’s efficiency for everyone.

Compatible Software Solutions

Many accounting software packages are already MTD-ready. Popular options include:

Xero – easy-to-use, suitable for small businesses and sole traders, supports both VAT and income tax MTD submissions.
QuickBooks Online – very popular with UK sole traders and SMEs, with excellent integration for bank feeds and digital receipts.
Sage Accounting – established UK provider, widely used for MTD VAT, now compatible for income tax too.
FreeAgent – designed for contractors and landlords, with built-in support for MTD quarterly updates.
Zoho Books, KashFlow, Capium – other viable solutions.

If you are already using digital accounting software, update or activate the MTD modules, check compatibility, and authorise your HMRC connection. If you use spreadsheets or manual records, now is the time to migrate—MTA Accountants offers hands-on support for the transition, including software selection, setup, and training tailored to London businesses and local property owners.

Quarterly Submission Deadlines

Under MTD, you’ll submit a summary of income and expenses every three months:

First submission: Covers 6 April 2026 to 5 July 2026, due by 7 August 2026.
Subsequent submissions: Each following quarter, due one month after the period ends.
Annual declaration: Due by 31 January after the end of the tax year, replacing your Self Assessment return.

You’ll get timely reminders from both HMRC and, if you use MTA’s client portal, from your accountant directly.

Benefits for London Businesses

While the move to MTD requires effort and adjustment, it brings clear benefits:

Less paperwork: All records digital, no more lost receipts or manual entries.
Accuracy: Automated bank feeds, digital receipt capture, and software calculations help minimise errors.
Timely insight: Quarterly reporting means you’re always up to date with tax obligations—no more nasty surprises at year-end.
Proactive tax advice: MTA can offer guidance based on live financials, not old spreadsheets, so you make better decisions for your business.

For London landlords and sole traders who still use spreadsheets or paper legs, the change may seem daunting. However, you will find a range of affordable, easy-to-use solutions, and strong support from MTA Accountants throughout the transition.

Checklist: What Should Businesses Do Now?

If you are a sole trader, landlord, or small business in London, follow these steps to prepare for MTD for Income Tax:

Assess your qualifying income: Add up gross self-employment and property income for the last tax year. If over £50,000, you must comply from April 2026; over £30,000 from April 2027; over £20,000 from April 2028.
Review your current accounting system: Are you already using an approved digital solution? If not, choose and install compatible software.
Digitise your historic records: Scan receipts, invoices, and rental contracts so your books are complete and electronic.
Authorise your agent or software with HMRC: Ensure your agent (e.g., MTA Accountants) or your software provider is accredited and connected.
Understand quarterly update requirements: Prepare to summarise income and expenses each quarter.
Train your team: If staff or family help with your accounts, make sure they’re comfortable with the new software.
Set calendar reminders: Plan for quarterly submission deadlines and annual declaration dates.
Ask for support: Engage MTA for hands-on help with setup, training, and compliance check-ups.

How MTA Accountants Can Help

As local accounting experts in London, MTA Accountants offers:

Free initial consultation to see if you qualify under MTD and when.
Software selection advice—finding the solution that fits your business’s size, complexity, and budget.
Data migration support—moving historical records and setting up digital systems.
Training for business owners and staff.
Day-to-day record-keeping support (optional).
Quarterly reminders and submissions to HMRC, taking away the stress so you never miss a deadline.
Proactive tax savings advice, capital allowances optimisation, and tailored guidance as new rules roll out.

Common Pitfalls to Avoid

Late digitisation: Don’t leave record migration until March 2026!
Manual record-keeping: Spreadsheets, paper receipts, and handwritten logs will no longer be compliant.
Missing quarterly deadlines: Penalties apply for late submissions, so mark your calendar well ahead.

Final Thoughts

Making Tax Digital for Income Tax is a significant regulatory shift, but with the right steps and professional guidance, London businesses can transition smoothly, avoid pitfalls, and embrace a more efficient and effective system. MTA Accountants is here to support every step—from eligibility checking to fully managed submissions, so you can focus on growing your business.

Get in touch with MTA Accountants for your free Making Tax Digital assessment and to start your transition today!

MTA ACCOUNTANTS

Making Tax Digital for Income Tax 2026: Complete Preparation Guide for London Businesses