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MTD for Self-Employed and Landlords- Important changes

The UK government has been rolling out Making Tax Digital (MTD) with the aim of making tax administration more effective, efficient, and easier for taxpayers. If you're someone considering filing your taxes yourself, it’s important to understand how MTD affects you now and in the future.

Implementation of Making Tax Digital (MTD) by the UK Government

Making Tax Digital (MTD) is a flagship initiative by HM Revenue & Customs (HMRC) designed to modernise the UK tax system. The aim is to make tax administration more effective, efficient, and easier for taxpayers by digitising record-keeping and reporting processes.

Key Features of MTD

  • Digital Record-Keeping: Taxpayers must keep digital records of income and expenses using HMRC-compatible software, replacing traditional paper methods.
  • Quarterly Reporting: Instead of a single annual return, taxpayers will submit quarterly updates to HMRC, offering a more accurate and timely picture of their tax position throughout the year.
  • End-of-Year Declaration: After quarterly updates, an end-of-year final declaration (replacing the annual Self-Assessment) is submitted via MTD-compatible software.

Upcoming changes for Landlords and Self-employed

Under Making Tax Digital (MTD) for Income Tax, you’ll need to keep digital records of your income and expenses, submit quarterly updates to HMRC every three months. At the end of the year, file an End of Period Statement (EOPS) to finalise your figures. Along with a Final Declaration to confirm your total income from all sources, similar to the current Self Assessment process.

Therefore, if you are a sole trader or landlord:
  • Check Your Income: If your annual business or property income exceeds the relevant threshold (£50,000 from April 2026, £30,000 from April 2027, and likely £20,000 from April 2028), you must comply with MTD for Income Tax.

  • Get MTD-Compatible Software: You will need to keep digital records and file quarterly updates using approved software.

  • Quarterly and Annual Filing: Be prepared for more frequent reporting, with four quarterly updates and a final declaration each tax year.

  • Voluntary Participation: If you are below the threshold, you may still choose to opt in and benefit from digital record-keeping.

FAQs

Who must comply with MTD for Income Tax?
Self-employed individuals and landlords with annual business or property income above the threshold (£50,000 from April 2026, £30,000 from April 2027, and £20,000 from April 2028/2029).

What if my income is below the threshold?
You are not required to comply, but can decide to join voluntarily.

What software do I need?
You must use HMRC-approved, MTD-compatible software to keep digital records and submit updates.

How often do I need to submit information?
You will need to submit quarterly updates and an end-of-year final declaration.

Will partnerships be included?
Yes, but the mandatory date for partnerships has not yet been announced.

What happens if I do not comply?
There will be enhanced compliance checks and stricter penalties for non-compliance as the regime expands.

Can I still file my own taxes?
Yes, as long as you use compatible software and follow the new digital processes.

Is the annual tax return abolished?
For those under MTD, the traditional annual Self-Assessment is replaced by quarterly updates and a final declaration via software.

💬 Need Help or Advice?

If you're not sure how these changes affect you or want help getting ready, we’re here to help. Whether you choose to file yourself or use an accountant, we can guide you through the process.

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