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MTD for Companies, Sole Traders and Landlords
- UPECO Columnist
- Jan 1
- 3 min read
Updated: Jan 4
Making Tax Digital (MTD) is HMRC’s move to a more digital tax system. In practice, it means keeping records digitally and sending submissions to HMRC through compatible software (not through manual online forms).
In this article:
MTD for VAT (already mandatory)
Who it applies to
All VAT-registered businesses, regardless of turnover (unless HMRC grants an exemption).
What you must do
Keep VAT records digitally
Submit VAT Returns to HMRC using MTD-compatible software (or “bridging software” if you use spreadsheets)
Important timing (sign-up). If you still need to sign up (or you are changing setup):
Sign up at least 72 hours before the VAT Return is due, or
7 working days before if you pay by Direct Debit
Simple steps (VAT)
Choose MTD-compatible VAT software (or bridging software).
Keep your VAT records digitally.
Connect the software to HMRC (authorise it).
Submit VAT Returns through the software (not the old portal).
MTD for Income Tax Self Assessment (MTD ITSA) – starts from April 2026
Who will need to use it. You’ll need to use MTD for Income Tax if:
You are a sole trader and/or a landlord
You are registered for Self Assessment
Your qualifying income is above the relevant threshold
What is “qualifying income”? Qualifying income means your total gross income (turnover) from:
Self-employment, and
Property (rent)
It is measured before expenses.
Confirmed start dates (phased)
From 6 April 2026: over £50,000 (based on the 2024–2025 tax return)
From 6 April 2027: over £30,000 (based on the 2025–2026 tax return)
From 6 April 2028: over £20,000 (based on the 2026–2027 tax return)
Partnerships
Business partnerships will be brought in later, but a firm start date has not been confirmed.
What changes under MTD ITSA. Instead of doing everything once per year, you will:
Keep records digitally in software
Send quarterly updates (income and expenses)
Do an end-of-year finalisation in software
Submit the final declaration by the normal deadline (31 January after the tax year)
Quarterly update deadlines (standard tax-year quarters)
7 August (for 6 Apr–5 Jul)
7 November (for 6 Apr–5 Oct)
7 February (for 6 Apr–5 Jan)
7 May (for 6 Apr–5 Apr)
What does NOT count towards the threshold test. These do not count towards “qualifying income” for MTD ITSA threshold purposes:
Employment (PAYE)
Pensions
Dividends
Also, partnership income does not count towards qualifying income.
Corporation Tax – key update (many people miss this)
MTD for Corporation Tax
HMRC has confirmed it does not intend to introduce MTD for Corporation Tax.
Important change: free online joint filing service is closingIf you currently file CT600 and accounts through the free joint online service:
The service closes on 31 March 2026
From 1 April 2026 you will need commercial software (or an agent) to file Company Tax Returns and accounts with HMRC
How to prepare (simple checklist)
If you are VAT registered
Confirm you are submitting VAT through MTD software.
Keep records digitally (avoid manual re-typing between systems).
Allow time before deadlines (especially if you pay by Direct Debit).
If you are self-employed and/or a landlord (Income Tax)
Work out your qualifying income (gross self-employment + gross rent).
If you are near/over the threshold, choose MTD ITSA-compatible software.
Keep clean digital records (sales, costs, categories).
Add the quarterly dates to your calendar and follow a routine.
Examples (simple)
Example 1 – joins from April 2026
Self-employment income (gross): £40,000
Property rental income (gross): £15,000
Total qualifying income: £55,000Result:
Above £50,000, so MTD ITSA applies from 6 April 2026.
Example 2 – joins from April 2027
Self-employment income (gross): £32,000
No property income
Result: Above £30,000, so MTD ITSA applies from 6 April 2027.
Example 3 – quarterly dates in real life. If you start MTD ITSA on 6 April 2026, your quarterly deadlines are:
7 Aug 2026, 7 Nov 2026, 7 Feb 2027, 7 May 2027
Your first end-of-year submission for 2026–2027 is due by 31 January 2028.
Need help setting up MTD properly?
At UPECO we support MTD setup and ongoing submissions using leading cloud systems. We are partnering with SAGE and offer competitive software subscription prices.
© 2026 UPECO LTD
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ATTENTION!
This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.
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