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Making Tax Digital for Income Tax: A Simple Guide for UK Sole Traders and Landlords

  • aafra9
  • Jun 9
  • 4 min read

Updated: 2 days ago

As the UK government continues its digital transformation, one of the most important shifts for self-employed individuals, and landlords is the introduction of Making Tax Digital (MTD) for Income Tax. This blog breaks down what MTD is, who it applies to, how to comply, and what resources are available to make the process easier. 


If you need support or guidance getting started with MTD, the team at PKPI is here to help. You can also watch the detailed MTD webinar recording for an expert breakdown of the process


 

What is Making Tax Digital for Income Tax? 


Making Tax Digital (MTD) is a UK government new approach for how sole traders and landlords will report their income and expenses more efficiently through digital tools. Starting 6, April 2026, self-employed individuals and landlords with income over £50,000 will be required to follow MTD rules and from April 2027, those earning over £30,000 should commence. 


Key requirements include: 


  • Using MTD-compatible software 

  • Keeping digital records 

  • Sending quarterly updates to HMRC 


 

 

 What You Will Need to Do?


To comply with the new rules, you’ll need to use MTD-compatible software to: 


  • Create, store, and correct digital records of your self-employment and property income/expenses 

  •  Send quarterly updates to HMRC about your business’s income and spending 

  • Submit a final declaration (replacing the traditional Self-Assessment tax return) 

  •  Pay any tax due by 31 January following the end of the tax year 

 

Since these tasks must now be done digitally, software implementation is mandatory. The government plans to require all customers to submit their tax returns through Making Tax Digital for Income Tax software — meaning paper returns or manual filing via HMRC’s current online system will no longer be an option once you’re registered for MTD. 

 

Before signing up, it’s essential to choose the right software and plan how you’ll manage your digital records and quarterly submissions efficiently. 


 

 Need help setting it up? Visit PKPI -we’ll make your MTD transition smooth and stress-free

 


Who Needs to Comply? 


If you are: 

  • A self-employed individual 

  • A landlord with income from UK property 

Then you will need to comply with MTD for Income Tax. 


 


Making Tax Digital for Income Tax: Step-by-Step Guide for Sole Traders & Landlords 



Step 1: Check Your Eligibility 


You must comply with MTD if it is: 


  • Your annual gross self-employment or property income exceeds £50,000 (mandatory from April 2026) 

  • Your income is between £30,000-£50,000 (mandatory from April 2027) 


    Verify here: 👉HMRC MTD ITSA Threshold Checker 



Step 2: Understand Key Deadlines 


Timeline 

Action Required 

Before April 2026 

Software setup & testing 

5 Aug 2026 

First quarterly update (Apr-Jun 2026) 

31 Jan 2027 

End of Period Statement + Final Declaration 

 



Step 3: Choose MTD-Compatible Software Requirements: 


  • Must digitally record income/expenses 

  • Must submit directly to HMRC via API 

  • Verify HMRC-Approved Tools here - Find Compatible Software 



Step 4: Set Up Digital Record Keeping 


Records must include: 

  • All business income and expenses 

  • Date, amount, and category for each transaction 

  • Property rental details (if applicable) 



Digital requirements:  👉MTD Digital Record-Keeping Rules 



Step 5: Submit Quarterly Updates 


How it works: 


  • Every 3 months, submit summary totals (not receipts) 

  • Deadlines: Aug 5, Nov 5, Feb 5, May 5 


    Example: 


    | Quarter | Submission Deadline

    |--------------------|-----------------------------  

    | Apr-Jun 2026 | 5 August 2026



    Key guidance:  👉Submit Quarterly Updates 



Step 6: Complete End of Period Statement (EOPS) 


After your accounting year-end: 


  • Submit adjustments (capital allowances, stock changes) 

  • Finalise profit/loss figures 

 

EOPS requirements:  👉Send an End of Period Statement 



Step 7: File Final Declaration 


Replaces your Self-Assessment: 


  • Combine all income sources (employment, investments, etc.) 

  • Claim allowances/reliefs 

  • Pay tax by 31 January 


Process explained: 👉Complete Your Final Declaration 



Critical Compliance Checklist 


 


Frequently Asked Questions (FAQs) – 


1. Do I have to sign up for Making Tax Digital if I already file Self-Assessment online?


A. No – not automatically. You’ll need to sign up separately for MTD for Income Tax and use compatible software, even if you already file online through GOV.UK.


If you’re unsure how to register or set things up, PKPI can guide you through it.



2. When exactly does MTD for Income Tax apply to me?


A. If your self-employment or rental income is over £50,000, you must comply from 6 April 2026. If your income is between £30,000–£50,000, it applies from April 2027.


PKPI can help assess your eligibility and timeline — visit PKPI  to check where you stand.



3. What happens if I don’t use MTD-compatible software?


A. You could face penalties, including fines for non-compliance and interest on late submissions. HMRC will no longer accept paper returns or outdated methods.


Get help choosing HMRC-approved software at PKPI



4. Can I use spreadsheets for MTD?


A. Yes – but only if your spreadsheet is linked to bridging software that connects with HMRC’s system. It must meet MTD’s digital requirements.


Need to integrate your spreadsheet properly? Reach out via PKPI



5. What’s the difference between MTD and Self-Assessment?


A. Under MTD, you’ll submit quarterly updates, followed by a Final Declaration, replacing the annual Self-Assessment return. Everything must now be digital.


For a full MTD walkthrough, speak to an expert at PKPI




How PKPI Simplify This Process 

We handle: 

  • Software setup & integration 

  • Quarterly filing on your behalf 

  •  EOPS and Final Declaration submission 

  •  Penalty protection Official agent authority: 

    Agent Services for MTD ITSA 

 


Ready to start? 



Key Resources 

 

Updated per HMRC guidelines June 2025. Always verify at the source. 

 

MTD for Income Tax isn’t optional – it’s the new standard for tax management in the UK. Whether you’re a business owner or an agent, getting prepared now ensures a smoother, stress-free transition. 


If you need help setting up your MTD-compliant system, don’t hesitate to reach out to our PKPI team for support or call +44 2079 418160


 

 
 
 

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