Are You a Sole Trader or Landlord with Sales or Rent of 50k or More?

Posted on 2nd May 2026 by David Rudd

Making Tax Digital for Sole Traders and Landlords (From April 2026)

Are you a sole trader or landlord with income over £50,000?
If so, the upcoming Making Tax Digital (MTD) changes will affect how you report your income to HMRC.

From April 2026, HMRC is introducing new rules that will require many individuals to submit tax information quarterly, rather than just once a year.

If that sounds like more admin… you’re not wrong!!! But with the right setup, it doesn’t have to be a headache.

What is Making Tax Digital ?

Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system.

For sole traders and landlords, this means:

• Keeping digital records of income and expenses
• Submitting quarterly updates to HMRC
• Filing a final end-of-year declaration

In short: less “once-a-year panic” and more regular reporting.

Who Does MTD Apply To?

From April 2026, MTD will apply to:

• Sole traders
• Landlords

…with annual business or rental income over £50,000.

From April 2027, this threshold is expected to drop to £30,000, bringing even more people into the system.

How Will MTD Affect You?

The biggest change is frequency.

Instead of one Self Assessment tax return per year, you’ll need to:

• Submit 4 quarterly updates
• Submit a final year-end return

That’s 5 submissions per year instead of 1.

If your records aren’t up to date, this will quickly become overwhelming which is why preparation now is key.

5 Practical Tips to Prepare for MTD

1. Register with HMRC Early

You’ll need to be signed up to the MTD system before you can submit returns.
Don’t leave this until the last minute HMRC systems aren’t known for being lightning fast.

2. Use a Separate Bank Account

Keep things simple:
One account for business or rental income and expenses

Mixing personal and business transactions creates unnecessary admin and increases the risk of errors.

3. Use Proper Accounting Software

Spreadsheets might work now… but under MTD they can become risky if not set up correctly.

And let’s be honest a bag of receipts is not a system.

Using cloud software means:

• Real-time tracking
• Fewer errors
• Easier submissions

4. Automate Where You Can

The goal isn’t more work it’s smarter systems.

Set up:

• Bank feeds
• Rules for recurring transactions
• Automated categorisation

Do the setup once, and let the system do the heavy lifting.

5. Review Your Business Structure

MTD is the perfect trigger to step back and ask:

Is my current setup still the most tax-efficient?

For some, moving from sole trader to limited company (or restructuring rental ownership) could make a significant difference.

Common Mistakes to Avoid

• Leaving bookkeeping until year-end
• Mixing personal and business finances
• Relying on manual systems
• Ignoring the changes until 2026

The earlier you prepare, the easier (and cheaper) it will be.

Why Planning Now Matters

MTD isn’t just a compliance exercise it’s an opportunity.

If your numbers are up to date every quarter, you can:

• Make better decisions
• Spot cashflow issues early
• Plan your tax properly (instead of reacting to it)

Need Help Getting Ready for MTD?

Every business and landlord situation is different. What works for one person may not work for another.

If you’re unsure how these changes affect you or want to get set up properly ahead of April 2026, we’re here to help, get in touch.