MTD for income tax will transform the way property rental businesses and sole traders with incomes of £50,000 or more (£30,000 from April 2027) manage their tax obligations, with a new requirement for digital records, online quarterly revenue reporting and a year-end declaration.
“MTD is part of the government’s taxation plans to enhance efficiency, and reduce tax reporting errors and omissions,” says David Crowter, Carpenter Box Tax Partner and Head of Private Client Services.
“It will mandate landlords and sole traders earning above the threshold to maintain timely trading records in a digital format and to comply with a quarterly and annual reporting regime, or risk being fined for late submissions. Self-assessment tax returns and payments will continue as is.”
MTD for income tax will require those affected to keep digital records of the amount, category and date of income and expenses relating to self-employment and/or a property business. A separate quarterly update will be needed for each trade or property business, so if a sole trader also has property income, they will need to submit eight quarterly submissions each year.
“Making Tax Digital marks a significant change to the UK tax system, but with the right tools and preparation, it can actually simplify tax compliance,” says David. “Although the start date is almost a year away, it’s worth getting advice now on how best to prepare for this important change in business income reporting for landlords and those who are self-employed.”
