Making Tax Digital (MTD) for Sole Traders and Landlords in London
What Does MTD Mean for You?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the largest transformation of the UK tax system since Self Assessment was introduced over 30 years ago. Rather than filing once a year, you will maintain digital records and submit income and expense summaries to HMRC every quarter using recognised software.
At GM Professional Accountants, we support sole traders, landlords, and owner-managed businesses across London and Essex. Whether you are based in Ilford, Wimbledon, Old Street, or anywhere across East London, our dedicated MTD team handles your registrations, software setup, and every quarterly submission so you can focus on running your business.
London & Essex coverage: GM Professional Accountants serves clients across London — including Ilford, Wimbledon, Old Street, and East London — as well as throughout Essex, providing hands-on MTD compliance support from our experienced team.
What Are the MTD Income Thresholds and Deadlines?
MTD for Income Tax is being phased in based on your gross qualifying income from self-employment and property combined. Here is the full rollout schedule:
| Start Date | Who Must Comply | Income Threshold | Status |
|---|---|---|---|
| 6 April 2026 | Sole traders & landlords | Gross income over £50,000 | Now Mandatory |
| 6 April 2027 | Sole traders & landlords | Gross income over £30,000 | Coming Soon |
| April 2028 (expected) | Sole traders & landlords | Gross income over £20,000 | Planned |
| TBC | General partnerships | Not yet confirmed | Future |
Note: Thresholds apply to your gross income before expenses. HMRC assesses your obligation based on the previous tax year’s return. You do not need to receive a notification from HMRC for the obligation to apply.
What Exactly Do Sole Traders and Landlords Have to Do Under MTD?
Under MTD ITSA, your annual tax return is replaced by a four-stage digital process. Here is how it works throughout the year:
Keep digital records throughout the year
All income and expenses must be recorded digitally using HMRC-approved software such as Xero, QuickBooks, or FreeAgent. Paper records and spreadsheets alone are no longer acceptable without compliant bridging software.
Submit four quarterly updates to HMRC
A summary of your income and expenses must be submitted to HMRC every three months. Quarterly deadlines fall on 7 August, 7 November, 7 February, and 7 May. Missing a submission earns a penalty point.
File an End of Period Statement (EOPS)
At the end of your accounting period, you confirm and finalise the figures for each income source, claim any adjustments or reliefs, and submit your EOPS through your software.
Submit a Final Declaration by 31 January
Replacing the traditional Self Assessment return, your Final Declaration consolidates all income sources (including savings, dividends, and other taxable income) and must be submitted by 31 January each year via your MTD software.
How Does MTD Specifically Affect Landlords in London and Essex?
Landlords are subject to exactly the same phased introduction as sole traders. If your gross rental income (before expenses) combined with any self-employment income exceeded £50,000 in the 2024/25 tax year, MTD applies to you from 6 April 2026.
Joint property owners: If you jointly own property, you must include your share of the rental income when calculating whether you breach the threshold. Each owner is assessed individually.
Non-UK residents: You must comply in respect of UK-taxable income if you hold a National Insurance number, even if you are based abroad.
For London landlords managing multiple properties across Ilford, Wimbledon, or East London, our MTD service includes quarterly management accounts, reconciliation of rental income across all properties, mortgage interest deductions, capital allowances, and submission of each quarterly update on your behalf.
If you hold property through a limited company or are considering structuring your portfolio, our specialist Property Developer Accountants for Limited Companies and Tax Planning service covers corporation tax, capital gains planning, and full MTD compliance for property businesses across London and Essex.
How Is MTD Different From Self Assessment?
This comparison table shows exactly what changes under Making Tax Digital and what stays the same:
| Feature | Old Self Assessment | MTD for Income Tax (from 2026) |
|---|---|---|
| Reporting frequency | Once a year | 4 quarterly updates + Final Declaration |
| Record keeping | Paper or spreadsheets | Digital records only (HMRC-approved software) |
| Tax rules (what you pay) | Same as current | No change to how tax is calculated |
| First reporting deadline | 31 January (annual) | 7 August 2026 (first quarterly update) |
| Penalty system | Fixed penalties | Points-based: 4 points = £200 fine |
| Final declaration deadline | 31 January | 31 January (unchanged) |
| Applies to limited companies | No | No (MTD for Corporation Tax TBC separately) |
What Software Do You Need to Be MTD Compliant?
You must use HMRC-recognised MTD-compatible software to keep digital records and submit your quarterly updates. The most commonly used platforms include Xero, QuickBooks, FreeAgent, and Sage. Spreadsheets such as Excel are not compliant on their own unless connected to HMRC via bridging software.
Xero
Cloud-based platform ideal for sole traders and landlords. Supports MTD quarterly submissions with bank feed integration and accountant collaboration.
QuickBooks
Feature-rich platform suited to businesses with multiple income streams. Automates invoicing, categorises transactions, and files quarterly updates.
FreeAgent
Popular with freelancers and sole traders. Straightforward interface, HMRC-approved for MTD ITSA, and integrates with NatWest and Royal Bank of Scotland accounts.
Sage
Comprehensive accounting software suitable for businesses with more complex requirements. Supports property portfolios, payroll, and MTD Income Tax submission.
Not sure which platform suits your business? Our team at GM Professional Accountants will assess your situation and recommend the right software for your income type, property portfolio size, and business structure.
What HMRC MTD Changes Are Coming in 2026 and 2027?
⚠ Flagged HMRC Changes Affecting Sole Traders & Landlords
April 2026 — MTD ITSA Phase 1 is live: Sole traders and landlords with income over £50,000 must submit quarterly updates from 6 April 2026. The first quarterly update deadline is 7 August 2026. Businesses not yet registered face immediate non-compliance.
April 2027 — Phase 2 threshold drops to £30,000: A further wave of sole traders and landlords will be brought into mandatory MTD from April 2027. Those in the £30,000 to £50,000 income band should begin preparations now.
April 2028 (planned) — Threshold expected to reach £20,000: The government has confirmed plans to lower the threshold further to £20,000, drawing in a significantly larger population of self-employed workers and smaller landlords.
Penalty reform: HMRC has replaced the fixed-penalty system with a points-based model. Each missed quarterly submission earns one point. Accumulating four points triggers a £200 fine, with further penalties for continued non-compliance.
MTD for Corporation Tax — date TBC: HMRC has signalled that Making Tax Digital will eventually extend to limited companies via MTD for Corporation Tax. No mandatory date has been confirmed, but sole director companies should monitor announcements.
Common Questions About MTD From Sole Traders and Landlords
Do I need to register for MTD even if HMRC hasn’t contacted me?
Yes. HMRC has confirmed that the obligation applies automatically based on your income level from your previous tax return. You do not need to receive a notification. If your 2024/25 tax return shows qualifying income over £50,000, you must comply from 6 April 2026.
Does MTD change the amount of tax I pay?
No. Making Tax Digital changes how and when you report your income to HMRC, not the tax rules themselves. The same allowances, deductions, and tax rates continue to apply under the new system.
Can I still use a spreadsheet to keep my records under MTD?
Spreadsheets alone are not compliant. You must use HMRC-approved software, or connect your spreadsheet to HMRC via recognised bridging software. Our team can advise on the most efficient solution for your record-keeping style.
What happens if I miss a quarterly submission deadline?
Each missed deadline earns one penalty point. Once you accumulate four points, HMRC issues a £200 financial penalty. Further missed submissions after that generate additional fines. The system resets once you establish a period of full compliance.
I am a landlord who earns less than £50,000 from property. Does MTD apply to me?
If your combined qualifying income from property and self-employment is below £50,000, you are not yet required to comply. However, the threshold drops to £30,000 from April 2027 and is expected to reach £20,000 from April 2028. Beginning preparations early avoids last-minute pressure.
Can GM Professional Accountants manage my MTD submissions on my behalf?
Yes. Our MTD compliance service covers everything: software selection and setup, HMRC registration, quarterly digital record reviews, all four quarterly updates, your End of Period Statement, and your Final Declaration by 31 January. Clients across London, Ilford, Old Street, Wimbledon, and Essex use our fully managed service.
Are partnerships and limited companies included in MTD ITSA?
Limited companies are not included in MTD for Income Tax; they will be subject to MTD for Corporation Tax when that is introduced (no confirmed date yet). Partnerships are expected to be included in a future phase, but no mandatory date has been confirmed. Individual partners may still be caught if they have qualifying sole trader or landlord income.
How Does GM Professional Accountants Support Your MTD Compliance?
Our London-based accountants have been helping sole traders, landlords, construction firms, professional consultancies, and property investors prepare for MTD since its announcement. We combine hands-on software expertise with proactive tax planning to ensure every quarterly deadline is met without last-minute pressure.
Full Registration Support
We manage your HMRC MTD registration from start to finish, including reviewing your circumstances and applying for exemptions where applicable.
Software Setup & Training
We identify and implement the right MTD-compatible software for your business and provide training so your records stay clean between submissions.
Quarterly Submissions
Our team handles all four quarterly updates and your Final Declaration, with reconciliations completed before every HMRC deadline.
Proactive Tax Planning
With quarterly visibility into your finances, we identify allowable deductions and optimise your tax position throughout the year, not just in January.
GM Professional Accountants serves clients across London and Essex, with particular expertise supporting sole traders and landlords in Ilford, Wimbledon, Old Street, and East London. Our senior advisors guide you through every regulatory change, from MTD to future HMRC updates.
Ready to Get MTD-Compliant?
Speak to our London MTD specialists today. We handle everything so you never miss a deadline.
Disclaimer: This content is for general guidance only and does not constitute financial or tax advice. Tax rules change and how they apply depends on your individual circumstances. Please speak to a qualified accountant before acting on anything here.
