14 Mar Making Tax Digital 2026: Do You Qualify? (And What to Do If You Do)
If you've been hearing whispers about Making Tax Digital (MTD) for Income Tax and wondering whether it applies to you, now's the time to get clued up. With April 6, 2026 just around the corner, this isn't one of those "I'll deal with it later" situations.
The good news? It's not as complicated as it sounds. Let's break down exactly who needs to worry about MTD, what it actually means for your business, and how you can get ready without losing sleep over it.
Who Actually Needs to Use MTD from April 2026?
You'll need to start using Making Tax Digital from April 6, 2026 if you tick all these boxes:
- You're registered for Self Assessment as a sole trader or landlord
- You earn income from self-employment, property rental, or both
- Your qualifying income was over £50,000 in the 2024 to 2025 tax year
Notice that word "qualifying"? That's important, and we'll get to it in a second.
If you've received a letter from HMRC telling you that you need to use MTD, that's your official heads-up. Don't ignore it. But even if you haven't had a letter yet, it's worth checking whether you fall into this category.
What Counts as Qualifying Income?
Here's where people often get confused. Qualifying income isn't just "all the money you make." It's specifically your gross income from:
- All self-employment sources (whether in the UK or overseas)
- Property rental businesses (UK and overseas properties)
What doesn't count towards your qualifying income:
- Wages from PAYE employment
- Pensions
- Investment income
- Dividends
So if you're a sole trader earning £40,000 from your business and you also earn £15,000 from a part-time PAYE job, your qualifying income is £40,000, not £55,000. You wouldn't need to start MTD until the threshold drops in 2027.
On the flip side, if you earn £30,000 from your trade and £25,000 from rental properties, your qualifying income is £55,000. You'd need to be MTD-ready by April 2026.
HMRC has an online tool to help you check your eligibility if you're still unsure. It takes about two minutes and gives you a clear answer.
The Rollout Schedule: What Happens After 2026?
MTD for Income Tax isn't a one-size-fits-all rollout. HMRC is phasing it in based on income levels, which means your start date depends on how much you earn.
April 6, 2026: Sole traders and landlords with qualifying income over £50,000
April 6, 2027: Those earning between £30,000 and £50,000
April 6, 2028 (planned): Income between £20,000 and £30,000
If you're currently below the £50,000 threshold, you've got a bit more breathing room, but don't leave it until the last minute. Getting your systems sorted early means less stress later.
What Do You Actually Need to Do?
Right, let's talk practicalities. What does "being MTD compliant" actually involve?
1. Keep Digital Records
No more shoeboxes full of receipts or hand-written ledgers (well, not as your primary system, anyway). You need to maintain digital records of your income and expenses using MTD-compatible software.
This doesn't mean you have to become a tech wizard overnight. Modern accounting software is designed to be user-friendly, and most of it does the heavy lifting for you.
2. Choose MTD-Compatible Software
This is mandatory. You can't just use a basic spreadsheet and email it to HMRC, the software needs to be approved by HMRC and able to submit updates directly.
The good news is there are loads of options out there. At Harrison's Accountancy, we're Xero Platinum Champions, which means we know the platform inside and out. Xero is one of the most popular choices for sole traders and small businesses because it's intuitive, cloud-based, and ticks all the MTD boxes.
But whether you go with Xero or another provider, the key is choosing something that fits your business and your budget.
3. Submit Quarterly Updates
Instead of doing one big Self Assessment return each year, you'll need to submit quarterly updates to HMRC. These updates summarise your income and expenses for that period.
Don't panic, this doesn't mean you're paying tax four times a year. It's just giving HMRC a heads-up on how things are going. You'll still do a final annual submission and pay your tax bill in the usual January and July instalments.
4. File Your End of Period Statement
At the end of the tax year, you'll submit an End of Period Statement (EOPS), which finalises everything. Think of it as the replacement for your old Self Assessment tax return.
Getting Ready: Your Action Plan
If you're reading this and realising that April 6, 2026 applies to you, here's what you should be doing right now:
Check your qualifying income for 2024/25. Add up your gross self-employment and property income. If it's over £50,000, you're in.
Review your current record-keeping. Are you already using digital software? Great. If not, it's time to make the switch.
Choose your MTD software. Do your research, read reviews, and ideally, get a recommendation from someone who knows the platforms well (like your accountant).
Get your software set up. Don't leave this until March. Give yourself time to learn the system, migrate your data, and sort out any teething problems.
Talk to your accountant. If you work with a small business accountant or sole trader accountant (like us at Harrison's Accountancy), now's the time to have a proper conversation about how MTD will work for your specific situation.
How Harrison's Accountancy Can Help
Look, we get it. Change is annoying, especially when it's being forced on you by HMRC. But Making Tax Digital doesn't have to be a nightmare.
As Xero Platinum Champions, we've helped dozens of sole traders and landlords make the transition smoothly. We don't just set up your software and wave goodbye, we walk you through the whole process, answer your questions, and make sure everything's working properly before the deadline hits.
Whether you're a sole trader running a one-person operation or a landlord juggling multiple properties, we've got the experience to make this as painless as possible. We'll help you choose the right software, get it set up correctly, and train you on how to use it day-to-day.
Plus, once you're up and running, we can handle your quarterly submissions for you if you'd rather not deal with the admin side yourself. You focus on running your business; we'll make sure HMRC gets what they need.
Get in touch with us and let's have a chat about your MTD setup.
What If You Can't Use MTD?
HMRC does offer exemptions in certain circumstances, though they're fairly limited.
You might be able to get an exemption if:
- Your age or a disability makes it genuinely impractical to keep digital records
- You have religious objections to digital filing
- You're in the process of becoming insolvent
If you think you might qualify for an exemption, you'll need to contact HMRC directly and explain your situation. They'll assess it on a case-by-case basis.
For the vast majority of people, though, exemptions won't apply, and honestly, once you're set up, MTD is often easier than the old paper-based system anyway.
The Bottom Line
Making Tax Digital for Income Tax is coming, whether we like it or not. If your qualifying income is over £50,000, you've got less than two months to get ready.
But here's the thing: this doesn't have to be stressful. With the right software and the right support, MTD can actually make your life easier. Real-time record-keeping means you always know where you stand financially. Quarterly updates mean no more January panic as you scramble to remember what happened 11 months ago. And cloud-based software means you can access your accounts from anywhere.
So yes, there's a deadline. Yes, you need to take action. But no, you don't need to do it alone.
If you're a sole trader or landlord wondering how to tackle MTD, we're here to help. At Harrison's Accountancy, we specialise in working with small businesses and individuals just like you. We'll make sure you're compliant, confident, and ready for April 6.
Let's get you sorted.
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