MTD for Income Tax UK: April 2026 Checklist for Sole Traders and Landlords

6 April 2026 is the date that changes how many UK sole traders and landlords report income to HMRC. MTD for Income Tax is moving from annual-only filing to a digital process with quarterly updates and an end-of-year final declaration. If your qualifying income is above the entry threshold, preparation now will save you a lot of stress later.

Right now, many people still keep records in spreadsheets, paper folders, or a mix of both. That can work for a standard Self Assessment return, but MTD for Income Tax asks for a cleaner digital process. If you start in late March, it will feel rushed. If you start in February, it is manageable.

Key point: if you are affected from April 2026, your first quarterly period starts on 6 April 2026 and your first quarterly update is usually due by 7 August 2026 under standard quarterly dates.

If you are not sure whether you fall inside the new rules, we can help you check your position and set up a practical filing workflow through our Self Assessment service, bookkeeping support, or a focused pre-April review.

Who needs to follow MTD for Income Tax from April 2026?

HMRC is introducing MTD for Income Tax in phases. The first phase starts on 6 April 2026 for eligible sole traders and landlords with qualifying income above the phase-one threshold.

Phase	Who it applies to	Start date
Phase 1	Self-employed people and landlords with qualifying income over £50,000	6 April 2026
Phase 2	Self-employed people and landlords with qualifying income over £30,000	6 April 2027

You can check HMRC’s current guidance on eligibility and timing here: Use Making Tax Digital for Income Tax.

The turnover thresholds often cause confusion, so here is the plain-English version.

• HMRC looks at qualifying income from self-employment and property.
• Employment income is not part of that entry test.
• Each person is assessed on their own income, not household income.

If you run a business with uneven months, do not assume you are below the threshold just because one quarter was quiet. We are seeing clients with a slow autumn and a very strong final quarter that pushes them above the line.

What changes on 6 April 2026 in practical terms?

For affected taxpayers, MTD for Income Tax introduces a different rhythm to the tax year.

1. Digital record keeping

You need digital records, maintained in compatible software. That means no final-year scramble where everything is reconstructed from bank statements in January.

2. Quarterly updates

You send quarterly summaries of income and expenses to HMRC. Under standard quarters, deadlines are usually one month and seven days after quarter end.

Standard quarter	Period end	Typical filing deadline
Q1	5 July	7 August
Q2	5 October	7 November
Q3	5 January	7 February
Q4	5 April	7 May

3. End-of-year final declaration

You still complete an end-of-year step to finalise your tax position, include claims and adjustments, and confirm the final bill.

So MTD is not four tax returns replacing one. It is quarterly updates plus a final annual declaration.

Worked example 1: checking if you are in from April 2026

Let us use a sole trader example.

• Turnover in 2025 to 2026: £62,000
• Allowable expenses: £18,000
• Profit: £44,000
• Property income: £0

The entry test is based on qualifying income levels, not just profit. In this scenario, the person is above £50,000 qualifying income and should expect to be in MTD for Income Tax from 6 April 2026.

That does not mean higher tax by default. It means a different reporting process and tighter admin discipline.

The practical difference for this taxpayer is workflow, not headline rates.

• They need digital records from day one of the new regime.
• They need a quarterly reporting schedule in place.
• They need a year-end process that ties all software records to final figures.

Worked example 2: estimated tax with current 2025 to 2026 rates

Now a tax estimate example for planning cash flow.

Assume taxable profit of £56,000 for 2025 to 2026, with no other income, and no pension or Gift Aid adjustments.

Using widely published 2025 to 2026 UK thresholds:

• Personal Allowance: £12,570
• Basic rate band: £37,700
• Higher rate threshold starts above £50,270

Taxable income after allowance: £56,000 - £12,570 = £43,430

Income tax estimate:

• 20% on £37,700 = £7,540
• 40% on £5,730 = £2,292
• Total income tax estimate = £9,832

Class 4 National Insurance estimate (using the 2025 to 2026 approach):

• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

So:

• 6% on £37,700 = £2,262
• 2% on £5,730 = £114.60
• Total Class 4 NI estimate = £2,376.60

Estimated combined figure: £12,208.60

Your exact position may differ based on other income, pension contributions, marriage allowance transfers, overlap relief history, and other factors. The value of this example is budgeting discipline. Once you run quarterly updates through software, cash-flow planning gets easier because surprises are smaller.

For rates and thresholds, check HMRC and GOV.UK updates before filing. We recommend reviewing Income Tax rates and allowances each tax year.

Choosing software for MTD without wasting money

Software choice is where many people either save time or create a long-term headache.

You do not need the most expensive package. You need one that handles your actual workflow.

For most sole traders and landlords, the shortlist should be judged on:

• Reliable bank feed connection
• Expense categorisation rules
• Clean quarterly summary reports
• Accountant access and permissions
• Clear support options when filing week arrives

If you are VAT registered already, there is a good chance you are already using software that can support a strong MTD process. If your records are still split between paper receipts, a personal current account, and a spreadsheet, this is the time to fix that.

A good starting plan:

• Week 1: choose software and connect bank feeds
• Week 2: map categories and posting rules
• Week 3: tidy historic coding issues
• Week 4: dry run a quarterly report

That dry run is important. It tells you whether your categories and chart logic make sense before real deadlines start.

Record keeping standards that stop last-minute panic

Quarterly submissions are difficult only when records are messy. Good records make the process routine.

Here is the baseline standard we suggest for clients:

• Keep business and personal spending separate wherever possible.
• Post income weekly, not quarterly.
• Attach digital evidence for larger or unusual costs.
• Reconcile the bank monthly.
• Track private use adjustments as you go.
• Keep a short notes file for one-off items.

The notes file is underrated. If you have a strange transaction in June and you wait until January to explain it, context is gone. A one-line note on the day saves an hour later.

If you need help setting this up, our bookkeeping service can build a monthly process around your bank data and invoice flow.

Penalties, late filing risk, and why early setup still matters

HMRC has confirmed that taxpayers who are mandated into MTD for Income Tax from April 2026 will not get late submission penalties for quarterly updates in year one. You can read that update here: HMRC points-based penalties and MTD announcement.

That breathing space is useful, but it is not a free pass.

• Interest can still apply on late paid tax.
• Year-end failures can still create costs.
• Admin pressure can still hurt your cash flow and decision making.

For context, standard Self Assessment late filing rules can escalate quickly:

• £100 fixed penalty for filing after deadline
• Daily penalties can apply after 3 months
• Additional charges can apply after 6 and 12 months

If you wait until the deadline and something simple breaks, such as login access or missing records, costs can build before you have solved the root issue.

Worked example 3: what delay can cost

Imagine a landlord affected by MTD from April 2026, with tax due at year-end of £4,800.

If they leave their final declaration late and miss payment timing, they can face:

• Fixed late filing penalty exposure
• Interest charges on overdue tax
• Time cost of urgent corrections

Even if the cash penalty looks manageable, the real hit is often admin disruption. We regularly see owners lose a full week of productive time when records are not ready.

A better approach is to spread the load.

• Keep quarterly records clean
• Review one month before each deadline
• Finalise year-end while details are still fresh

A 90-day preparation plan you can actually follow

You have enough time before April 2026 to make this controlled and predictable.

Days 1 to 30: decide and clean up

• Confirm whether your qualifying income puts you in from April 2026.
• Choose MTD-compatible software that suits your business size.
• Connect bank feeds and import current-year data.
• Check category mapping for sales, travel, subscriptions, professional fees, and other common costs.

Days 31 to 60: run the process once

• Reconcile all months to date.
• Produce a trial quarterly summary.
• Fix obvious categorisation errors.
• Agree who does what if you work with an accountant.

Days 61 to 90: lock in deadlines and controls

• Put all quarterly and year-end dates in your diary.
• Set a recurring monthly bookkeeping date.
• Prepare an evidence folder structure for receipts and invoices.
• Book a pre-April review if you are close to the threshold or have mixed income.

This is one of those areas where small habits matter more than heroic effort.

Common mistakes we are already seeing

Mistake 1: assuming MTD is optional if you dislike software

Mandated taxpayers do not get to opt out because spreadsheets feel easier.

Mistake 2: confusing quarterly updates with final tax due

Quarterly updates are summaries, not the final tax settlement step.

Mistake 3: waiting until the first deadline to test setup

If software permissions, bank feeds, or category rules fail in deadline week, pressure goes through the roof.

Mistake 4: no cash buffer for tax

Digital reporting gives better visibility, but you still need to reserve funds for tax and National Insurance.

Mistake 5: forgetting the link between MTD, Self Assessment, and broader compliance

Many owners handle VAT, payroll, and annual personal tax at the same time. Joining those processes up avoids duplicate work. If your business already submits VAT digitally, you may be able to adapt that discipline for income tax reporting. Our VAT returns team can help align both workflows.

FAQ: MTD for Income Tax April 2026

Do I need MTD for Income Tax if I am employed and have a side business?

Possibly. Employment income itself is not the entry test, but qualifying self-employment and property income can still bring you into scope if above the threshold.

Will MTD mean I pay tax four times a year?

Not automatically. You submit quarterly updates, then complete an end-of-year declaration to finalise your tax position.

I am below £50,000 now. Should I ignore this until 2027?

No. Early setup still helps. If your income grows, you will be ready. Even below the threshold, better records reduce January stress.

Can I keep using spreadsheets?

For mandated taxpayers, you need digital record keeping and compatible submissions. A spreadsheet on its own is often not enough unless combined correctly with bridging methods that meet HMRC requirements.

What if I miss a quarterly update in the first year?

HMRC has said no late submission penalties for quarterly updates in year one for those mandated in from April 2026. That does not remove all risk around interest, year-end completion, or broader compliance obligations.

What is the best next step if I am unsure?

Book a short readiness review, confirm if you are in scope, test your software setup, and create a filing calendar before April.

Final practical next step

If you think you may cross the £50,000 threshold, run a one-hour MTD readiness check this week, not in late March. Check your income position, choose software, and trial one quarterly report. That single session usually turns a vague worry into a clear plan.

If you want us to review your records and build a filing workflow before the April 2026 start, contact Golden Tree Consulting via our contact page.