How Sole Traders and Landlords Can Prepare for Making Tax Digital (MTD)

Making Tax Digital (MTD) is a major change in the way HMRC requires businesses and individuals to keep records and submit tax returns. From the 2026–27 tax year, MTD will apply to sole traders and landlords, with the first MTD return due by 31 January 2028. Here’s how to get ready:

What is MTD?

MTD is an HMRC initiative to make tax administration more effective, efficient, and easier for taxpayers. It requires digital record-keeping and quarterly submissions using compatible software.

Who Needs to Comply?

• Sole traders with business income

• Landlords with property income

• Those with combined business/property income above the MTD threshold (check HMRC for the latest figure)

Steps to Prepare

1. Review Your Record-Keeping

   Switch from paper or spreadsheets to HMRC-approved digital bookkeeping solutions (e.g., QuickBooks, Xero, Sage).

2. Understand Quarterly Reporting

   MTD requires quarterly updates, not just an annual tax return. Plan your admin time accordingly.

3. Choose Compatible Software

   Select software that integrates with HMRC’s MTD system. Ask your accountant for recommendations.

4. Get Trained

   Familiarise yourself and your team with the new software and reporting requirements.

5. Stay Informed

   HMRC guidance is regularly updated—sign up for alerts or speak to your advisor.

Common Pitfalls

• Leaving preparation too late

• Not checking if your software is MTD-compatible

• Forgetting to submit quarterly updates

Support from Arthur Hamiltons

We can help you:

• Set up digital bookkeeping

• Train you on MTD software

• Handle quarterly submissions

• Ensure compliance and avoid penalties

Contact us for a free MTD readiness review and peace of mind as the deadline approaches!