If you are a landlord or sole trader, you may have heard that Making Tax Digital (MTD) is changing how tax is reported to HM Revenue & Customs.
For many people, this will be the biggest change to self-assessment in a generation – and it is coming sooner than you think.
From April 2026, MTD for Income Tax will become mandatory for a large number of landlords and sole traders. While this is being led by accountants and software providers, there are important legal and practical issues that business owners should be thinking about now.
Who will MTD apply to?
You will need to comply with Making Tax Digital for Income Tax if:
You are a sole trader or UK landlord, and
Your combined business and/or property income is over £50,000 per year, and
You currently submit a Self Assessment tax return
(Those earning between £30,000 and £50,000 will be brought in from April 2027.)
What is actually changing?
At the moment, most people submit one tax return per year. Under MTD for Income Tax, you will be required to:
Keep digital records using HMRC-compatible software
Submit quarterly updates of income and expenses
Submit a final declaration at the end of the tax year
This means more frequent reporting, tighter deadlines, and less tolerance for informal or paper-based systems.
Why this matters (beyond tax)
Although MTD is a tax reform, it has wider consequences:
Cash flow pressure: quarterly reporting highlights issues earlier
Record-keeping obligations: poor documentation can now cause recurring problems, not just an annual headache
Business structure decisions: some landlords and sole traders are reassessing whether their current setup still makes sense
Compliance risk: penalties for late or inaccurate submissions can quickly add up
For landlords in particular, MTD often coincides with wider questions around property ownership, succession planning, and family arrangements.
What should landlords and sole traders do now?
Even though April 2026 may feel distant, the businesses that struggle most are those that leave preparation too late. Sensible steps to take now include:
Speaking to your accountant about MTD-compatible software
Reviewing how income and expenses are currently recorded
Checking whether all properties and business activities are correctly structured
Making sure agreements, ownership arrangements, and records are clear and up to date
Where legal advice can help
At Marlborough Law, we regularly support landlords and sole traders alongside their accountants. While we do not provide tax advice, we can help with:
Reviewing business and property structures
Ensuring ownership and partnership arrangements are properly documented
Advising on succession and future planning
Helping clients understand their obligations clearly and calmly, without unnecessary alarm
Why Now
Making Tax Digital is intended to modernise the tax system, but for many people it will feel like an extra administrative burden. With the right preparation, it does not have to be disruptive.
If you are a landlord or sole trader and would like a practical, plain-English discussion about how these changes fit into your wider legal and business picture, our team would be happy to help.
Based in Hungerford, we work closely with individuals and small businesses across West Berkshire, offering clear advice with a focus on long-term stability rather than short-term fixes.
