Making Tax Digital for Income Tax is no longer coming. It arrived on 6 April 2026.
And there is one detail in it that catches more people than everything else combined — a detail that quietly pulls in landlords and sole traders who are entirely confident it does not apply to them.
The trap: it’s measured on gross income, not profit
Qualifying income means your gross turnover and rents — before deducting a single expense.
Not profit. Not taxable income. Not what lands in your bank account after the mortgage, the agent’s fee and the boiler repair.
So consider a landlord:
- Rental income: £55,000
- Mortgage interest, agent fees, repairs: £30,000
- Actual profit: £25,000
That landlord is in scope. Their profit is half the threshold; their gross income is above it.
And if you have both self-employment and property income, the two are added together for the test. A modest consultancy turning over £30,000 alongside £25,000 of rent puts you over £50,000 — even though neither, alone, would.
This is where most of the surprise is going to come from.
What are the thresholds and dates?
From 6 April 2026: qualifying income over £50,000 From 6 April 2027: over £30,000 From 6 April 2028: over £20,000
HMRC determines whether you are in scope by looking at the qualifying income reported on your previous tax return. So your 2024/25 return is what put you into MTD from April 2026 — you were assessed on a figure you filed long before you were thinking about this.
The thresholds do not increase with inflation. As rents and turnover rise, more people are pulled in each year without any change in the rules.
What do I actually have to do?
Keep digital records. Not a shoebox, and not a spreadsheet that someone retypes into software. The data must be captured and stored digitally, with digital links between systems — manual copy-and-paste does not comply.
Submit quarterly updates. Short digital summaries of income and expenses, sent through compatible software after each quarter. These are not four tax returns; they are running totals.
Submit separately for each source. If you have a trade and let property, they are reported separately.
Make a final declaration after the year end, which replaces the Self Assessment return and is where reliefs, adjustments and other income are brought in.
The deadline for paying your tax has not changed. Only how — and how often — you report.
What if I’m not ready?
Then deal with it now rather than at the first quarterly deadline, because retrofitting a year of records is considerably more expensive than setting them up properly.
Practical steps:
Work out whether you’re actually in scope — using gross income, added across all sources. Most people who think they are safe have not done this calculation.
Get cloud accounting in place. It is the compliance mechanism, not an optional upgrade. Bank feeds, receipt capture and reconciliation rules mean the quarterly update becomes a review rather than a scramble.
Landlords in particular: if you have been running a portfolio on a spreadsheet and an annual reconciliation, that model has ended.
The honest silver lining: clients forced into monthly digital records almost always end up with a far better understanding of their own numbers, and frequently discover costs they had been quietly absorbing for years.
Frequently asked questions
Does MTD for Income Tax apply to me?
If your qualifying gross income from self-employment and/or property exceeded £50,000, yes — from 6 April 2026. The threshold drops to £30,000 in April 2027 and £20,000 in 2028. Crucially, it is measured on gross turnover and rents before expenses, and self-employment and property income are added together.
I only make £25,000 profit from my rentals. Am I in scope?
Possibly, yes. The threshold applies to gross rent before any expenses. If you receive £55,000 in rent and spend £30,000 on mortgage interest, agent fees and repairs, your gross income is £55,000 — above the threshold — even though your profit is only £25,000. This is the single most misunderstood point in MTD.
Are quarterly updates the same as four tax returns?
No. They are short digital summaries of your income and expenses, submitted through compatible software — running totals rather than full returns. You still make a final declaration after the year end, which is where reliefs, adjustments and other income are brought in. Your payment deadlines have not changed.
Can I still use a spreadsheet?
Only via bridging software, and with genuine digital links — the data must flow electronically, not by copy-and-paste. In practice, cloud accounting with bank feeds is simpler, cheaper and less fragile than a spreadsheet plus bridging software held together with goodwill.