If you’re a landlord or self-employed, there’s a good chance you’ve heard people talking about Making Tax Digital (MTD).
It sounds like another piece of tax jargon, but for many landlords and sole traders, it’s now a reality.
From 6 April 2026, MTD for Income Tax applies to people registered for Self Assessment whose combined gross income from self-employment and property was more than £50,000 in the 2024/25 tax year.
Gross income means the amount received before expenses are deducted, not taxable profit. Salary, pension income, dividends and most other types of income don’t count towards this threshold.
Your accountant or tax agent may be able to handle the submissions for you, provided they are authorised and the work is included in the service you’ve agreed. It’s still important to confirm who’s responsible for signing up, maintaining records and meeting each deadline.
These changes are also about more than simply filing tax returns. They could help you build a clearer picture of your finances throughout the year.
What Actually Changes?
One of the biggest misconceptions is that you’ll now pay tax every three months.
That’s not the case.
Instead, compatible software will add together your income and expense records from the start of the tax year. These running totals are then sent to HMRC at quarterly intervals.
You’ll generally need to send a separate update for each self-employment or property business you have. The updates are summaries rather than tax returns, and they don’t create an immediate tax bill.
You’ll still complete an annual Self Assessment return and pay any final tax due by 31 January. However, if you are within MTD, the return must also be submitted using compatible software.
Think of it as smaller financial check-ins during the year, followed by the usual year-end return.
Why This Could Be Good News
It’s easy to see Making Tax Digital as extra paperwork, but there are some positives.
Many business owners and landlords only discover how profitable they really are when they prepare their tax return months after the tax year has ended. By then, opportunities to improve cash flow or reduce tax efficiently may already have passed.
Keeping records up to date means you’ll have a clearer picture of your finances all year round. That makes it easier to budget for tax, monitor profitability and avoid unpleasant surprises when payment deadlines arrive.
It can also highlight issues earlier, giving you more time to deal with them before they become bigger problems.
Financial Planning Becomes More Important
Regular reporting also creates a natural opportunity to review your wider financial plan.
For example, if your business has had a particularly strong quarter, you might decide to increase pension contributions, build up an emergency fund or set aside more money for future tax liabilities.
Likewise, if income has slowed, you can adjust your plans sooner rather than waiting until the end of the tax year.
For landlords, it can also help when reviewing mortgage costs, rental income and future investment decisions.
In other words, quarterly reporting isn’t just about keeping HMRC happy. It’s about making better financial decisions throughout the year.
Start Preparing Now
If you think Making Tax Digital could affect you, don’t leave preparations until the last minute.
Check whether the rules apply to you, make sure you’re using compatible software and keep your records up to date. Building good habits now will make quarterly reporting much easier going forward.
At Cedar House Financial Services, we work alongside our clients’ accountants to help ensure tax planning fits into a wider financial strategy. Whether that’s making the most of pension contributions, planning for retirement or managing long-term wealth, having an up-to-date picture of your finances can only be a positive thing.
If you’d like to discuss how these changes could affect your wider financial plans, get in touch with our team today on 020 8366 4400 or email enquiries@cedarhfs.co.uk.