The self-employed and landlords are being urged to prepare for the long-awaited Making Tax Digital for Income Tax (MTD for IT) rule change, which marks a fundamental shift in how they report their income to HMRC.
From April 2026, all sole traders and landlords with gross qualifying income over £50,000 before expenses will be legally required to change how they keep records and report to HMRC.
The new MTD for IT replaces the traditional once-a-year Self-Assessment tax return with a fully-digital reporting system – and HMRC has already identified all affected individuals using 2024-25 tax return data.
HMRC is issuing notification letters to these individuals, but Paul Guise, director at West Midlands accountancy practice Prime Accountants Group, is warning that many people are still unprepared and time is running out for them to avoid the risk of penalties and errors.
Paul said: “The deadline is approaching fast, so anyone within scope must now keep digital records, submit quarterly updates to HMRC and submit a final declaration.
“It’s a huge change and with the start date imminent, preparation must happen sooner rather than later.”
Paul says there are five key points people impacted by the change should address before the end of the tax year. They are:
- Confirm you are in scope - check your 2024/25 gross income from self-employment and property. If it exceeds £50,000, you are required to comply from April 2026
- Have MTD-compatible software in place – you cannot submit under MTD using HMRC’s existing online system. If software has not yet been chosen and set up, this should be treated as urgent
- Be actively keeping digital records – you should already be recording income and expenses digitally. Waiting until April increases the risk of errors and non-compliance
- Understand quarterly reporting – quarterly updates are mandatory. Knowing what must be reported, when and how is essential to staying compliant
- Get professional support if needed – expert guidance can prevent costly mistakes. Advice now is far more effective than damage control later
“With little over a month to go, delaying preparation increases the likelihood of missed deadlines, inaccurate submissions, penalties from HMRC and significant stress during the first reporting period,” added Paul.
“Those who are already prepared will move into MTD smoothly. Those who are not risk falling behind from day one.
“April will soon be here so if you are affected, our advice is clear – now is the time to act.”
For more information on MTD from Prime Accountants Group, visit https://primeaccountants.co.uk/prime-accountants/frequently-asked-questions-on-making-tax-digital.
