Making Tax Digital for sole traders and landlords: what changes and when
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Making Tax Digital for Income Tax changes how sole traders and landlords report to HMRC. Instead of one tax return a year based on whatever records you kept, you keep digital records and send HMRC a short update every quarter.
Who it applies to, and when
It depends on your qualifying income: your total turnover from self-employment plus your rent received, before any expenses. HMRC looks at the tax return from two years before each start date (GOV.UK).
- Over £50,000 on your 2024 to 2025 return: from 6 April 2026
- Over £30,000 on your 2025 to 2026 return: from 6 April 2027
- Over £20,000 on your 2026 to 2027 return: from 6 April 2028
It's turnover that counts, not profit. A landlord with £35,000 of rent and £20,000 of costs still has qualifying income of £35,000.
What you'll need to do
- Use compatible software. You'll need software that works with HMRC for Making Tax Digital. HMRC keeps a list on GOV.UK.
- Keep digital records. Record your income and expenses in the software, or in a spreadsheet linked to it, as you go.
- Send quarterly updates. A short summary of each quarter's income and expenses goes to HMRC through the software.
- Finish the year with your tax return, also through the software, where you add any other income and claim allowances.
Choosing software
Popular options include Xero*, Sage*, QuickBooks* and FreeAgent*. Before you choose, check the product is on HMRC's list for your type of income, that it connects to your bank, and what it costs once any introductory offer ends. Our guide to choosing accounting software goes through the questions to ask.
Start early
The first quarter is the hardest, because you're setting up software and habits at the same time. Getting your records onto software a few months before your start date makes the first update simple.
General information only, not professional advice. Rules and products change; check GOV.UK or with an accountant before acting.