HMRC's UPDATE ON UPCOMING MTD THRESHOLDS: WHAT SOLE TRADERS AND LANDLORDS NEED TO KNOW

ASESA Solutions Ltd - UPCOMING MTD THRESHOLDS: WHAT SOLE TRADERS AND LANDLORDS NEED TO KNOW

Making Tax Digital for Income Tax is being introduced in stages. While the first phase began in April 2026, further sole traders and landlords will come within the scope of MTD over the next two years. .

Who Will Be Affected?

The current timetable is:

• More than £50,000 qualifying income – MTD from 6 April 2026 

• More than £30,000 qualifying income – MTD from 6 April 2027 

• More than £20,000 qualifying income – MTD from 6 April 2028 

Qualifying income refers to the total income from self-employment and property before expenses and tax. 

What Will Businesses Need to Do?

Those brought into MTD will need to use compatible software to:

• Keep digital records of business and property income and expenses. 

• Submit quarterly updates to HMRC. 

• Complete the required end-of-year tax return.

The reduction of the threshold to £20,000 from April 2028 will bring additional sole traders and landlords into the system. 

What Should Businesses Do Now?

Businesses approaching the relevant income thresholds should review their record-keeping processes and consider whether their existing software is compatible with MTD.

Preparing early can help avoid last-minute changes when the requirements become mandatory.

Key Takeaway

MTD for Income Tax is being introduced gradually, but the scope will continue to expand. Sole traders and landlords should check their qualifying income and understand when the rules will apply to them.