Making tax digital or MTD came into effect for many sole traders and landlords in the tax year starting 6th April 2026. However, so far, fewer than 30% of those required to sign up for it have yet done so.
What is MTD?
MTD is the switch from annual reporting for tax purposes to quarterly reporting using government-approved software. The aim is that this will provide an overview of finance in real time, helping sole traders and landlords to get their tax right.
Who should register?
Currently, those landlords and sole traders with an income of over £50,000 are required to register, with those earning over £30,000 to register for 2027, and those earning over £20,000 in 2028.
So far, around 219,000, or less than three-tenths of those required to register this year, have done so. About 75% of those who have registered have an agent or accountant who has been on top of these changes. If you are unsure how these changes apply to you or any other aspect of tax management, it is worth using an accountant. An internet search will show who is available in your area. For example, if you search for Worcester accountants, you will get results like https://www.randall-payne.co.uk/services/accountancy/worcester-accountants/.
What happens if I don’t register?
The first quarterly report has to be completed by August 7th, so you have until then to sign up. After this, HMRC will write to those who miss the deadline, but not penalise anyone this tax year. However, in future years, failure to register and report will result in fines.
