Making Tax Digital for Income Tax: A Practical Guide for Sole Traders and Landlords
Last updated: 26 October 2026
Making Tax Digital for Income Tax requires affected sole traders and landlords to keep digital records, send quarterly updates and submit an annual tax return through compatible software. It started on 6 April 2026 for those with qualifying income over £50,000, with further phases from 6 April 2027 for income over £30,000 and 6 April 2028 for income over £20,000. Qualifying income is your combined gross self-employment and property income before expenses, and Nordens can help you check your start date, choose software and agree practical, fixed-fee support.
Who is affected, and when?
The £50,000 phase is already live, not a future deadline. Check the relevant tax year's income, rather than looking only at what you earn today:
- From 6 April 2026: qualifying income over £50,000 in 2024/25.
- From 6 April 2027: qualifying income over £30,000 in 2025/26.
- From 6 April 2028: qualifying income over £20,000 in 2026/27.
The thresholds say over, not “at least”. Employment income does not count towards this qualifying-income test, although it may still need to appear in your annual tax return. If you have jointly owned property, check your share of the income; special circumstances and exemptions can affect your obligations.
Check the official HMRC eligibility guidance. If you should already be using MTD but are not, speak to your accountant promptly instead of waiting for the next phase.
What you need to do
- Check your qualifying income. Combine gross trading and property income from the relevant Self Assessment tax return and confirm your start date.
- Agree who does what. Decide whether you or your accountant will keep records, check them and submit the updates and annual return.
- Choose MTD for Income Tax-compatible software. VAT compatibility alone is not enough. Check the exact product, plan and filing workflow against HMRC's software finder.
- Set up digital records. Bring bank transactions, sales, expenses and rental records into an organised system, keeping source documents and separating personal spending.
- Arrange setup and training. Test receipt capture, bank feeds and access for your accountant before your reporting deadlines.
- Sign up and authorise your accountant where needed. Confirm your MTD registration and permissions rather than assuming a software subscription registers you.
- Keep records up to date and send quarterly updates. Review categories and missing entries before submission; maintain separate records and updates for each business or property business where required.
- Complete the annual tax return. Make year-end adjustments, include other income and reliefs, and finalise your tax position by the usual 31 January deadline after the tax year.
Quarterly updates report cumulative income and expense totals for the tax year to date, not individual receipts. The standard deadlines are 7 August, 7 November, 7 February and 7 May; for those who started in April 2026, the next deadline is 7 November 2026. Check HMRC's quarterly update guidance for your reporting obligations.
Quarterly reporting does not mean paying tax quarterly. The usual 31 January and, where relevant, 31 July payment dates continue; keeping money aside for tax is still important.
Xero vs QuickBooks vs Dext: which software suits you?
There is no single best software for every sole trader or landlord. Start with the records you need, the work you want to do yourself and the accountant who will support you, then check the exact subscription and filing route before paying.
| Option | Who it suits | Role in your MTD workflow | What to check before paying |
|---|---|---|---|
| Xero | Sole traders who want bookkeeping, bank feeds and invoicing in one cloud system; landlords where the selected setup supports their property records. | Digital bookkeeping with an Income Tax reporting workflow, depending on the selected product and accountant setup. | Confirm Income Tax compatibility, property support, the filing product and any additional subscriptions. Nordens is a Xero Certified Partner. |
| QuickBooks | Sole traders looking for day-to-day bookkeeping and invoicing; landlords whose needs fit the chosen product. | Digital records and Income Tax reporting through the appropriate MTD-compatible product. | Check the UK product and plan, self-employment and property support, accountant access and ongoing price after any introductory offer. |
| Dext for capture | People with receipts and invoices to organise who want less manual data entry. | Captures and organises source documents and can feed records into accounting software. Capture alone is not the full tax filing workflow. | Check the integration with your accounting software, what your accountant reviews and which product submits updates and the annual return. Avoid paying twice for overlapping capture tools. |
| Nordens fixed-fee support | Sole traders and landlords who want hands-on help with setup, digital records and quarterly reporting. | An agreed service combining practical bookkeeping and tax support around your chosen software. | Request a fixed-fee quote with clear responsibilities and inclusions, including setup, software charges, quarterly submissions and annual filing. No universal fee is quoted here. |
Check current product details with Xero, QuickBooks and Dext, alongside HMRC's software list. Features, prices and supported workflows can change; a product listed for VAT should not be assumed to support Income Tax.
Hands-on digital bookkeeping and fixed-fee tax reporting
Nordens' cloud accounting and bookkeeping team can help with software selection, conversions, training and record-keeping. Our tax team can explain your obligations and help with quarterly reporting and your annual tax position.
For landlords and property owners, the right setup should reflect your property activities as well as any separate trade. Ask for a written fixed-fee proposal that makes clear what you provide, what we check and submit, and whether software costs and annual filing are included.
To discuss managing your business tax returns online or setting up digital bookkeeping, contact Nordens. We will help you agree a practical next step rather than asking you to choose software without support.
Join the Nordens and Dext MTD webinar
On 12 November 2026, 11:00 AM to 12:00 PM GMT, Elizabeth Bello from Nordens and Freddie Minns from Dext will discuss who needs to use MTD, digital records, quarterly reporting and how capture tools can help. View the Making Tax Digital for Income Tax webinar and register.
Frequently asked questions for sole traders and landlords
Do sole traders and landlords both need to use MTD for Income Tax?
Yes, both can be affected if their qualifying income exceeds the threshold for the relevant phase. Qualifying income is gross income from self-employment and property combined, before expenses, not profit or salary.
I earn income from a business and a rental property. Do I add them together?
Yes, add your gross self-employment and property income when checking the threshold. For example, £22,000 from a trade plus £12,000 from property is £34,000 qualifying income, so the April 2027 phase may apply if these are your 2025/26 figures.
Does MTD mean I pay tax every quarter?
No, quarterly updates report your income and expenses; they are not quarterly tax bills. The usual Self Assessment payment dates remain 31 January and, where payments on account apply, 31 July.
Can I keep using a spreadsheet?
You may be able to keep digital records in a spreadsheet if you connect it to suitable MTD-compatible bridging software. Check that the complete setup supports MTD for Income Tax, not just MTD for VAT, and maintains the required digital links.
Which accounting software is worth paying for for digital tax reporting?
The right choice depends on the records you keep, how you invoice, your rental activities and how much work your accountant handles. Compare the exact Xero or QuickBooks plan, its Income Tax filing support, training and total subscription cost; consider Dext where receipt and invoice capture would save time.
Can Dext replace my tax return software?
Dext can help capture and organise receipts and invoices, but capture alone is not a complete tax filing process. Agree with your accountant which software will submit quarterly updates and the annual tax return, and how your Dext records will feed into it.
Does Nordens offer fixed-fee quarterly reporting support for landlords and sole traders?
Nordens can discuss fixed-fee support for digital bookkeeping and quarterly reporting, with the scope agreed around your business or property records. Ask for a written quote confirming whether software, setup, bookkeeping checks, quarterly updates and the annual tax return are included.
Where can I get hands-on help setting up digital bookkeeping and managing tax returns online?
Nordens' cloud accounting and tax teams can help you choose a workflow, set up digital record-keeping and prepare for quarterly reporting. Contact the team to agree the software, responsibilities and level of practical support you need.
How do I choose an accountant for digital tax reporting?
Look for someone who understands your trade or rental activity, supports your chosen software and explains who checks and submits each update. Ask about training, access to your records, annual filing and the full fee rather than choosing on a software badge alone.
What if I cannot use digital tools?
HMRC allows exemptions in specified circumstances, including where it is not reasonable or practical to use digital tools because of age, disability, location or other reasons. Check HMRC's exemption guidance and get advice about your situation rather than assuming you are exempt.
Sources and review date
This guide was checked on 26 October 2026 against HMRC's eligibility guidance, compatible software guidance and exemption guidance. It provides general information, not a decision on your individual tax obligations; check the latest guidance and seek advice about your circumstances.