What does Making Tax Digital mean for the self-employed and landlords?

Making Tax Digital (MTD) will transform how self-employed individuals and landlords manage and report their taxes in the UK. From the 6th April 2026, the changes introduced will mean new digital requirements and reporting obligations. Understanding what MTD for the self-employed and landlords is essential to staying compliant and avoiding penalties. 

At Rayner Essex, we support clients through every stage of this transition to understand and implement these requirements with confidence.

What Is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is one of the most significant overhauls introduced by HMRC since the self-assessment was launched over 30 years ago.  It has been transformed to modernise the UK tax system by requiring digital record-keeping and reporting of your income and expenses, and regular online submissions to reduce reporting errors and close the tax gap using HMRC compatible software and ensure automatic data flows directly to your main tax return software from HMRC systems directly. 

MTD for Income Tax will apply from April 2026 to self-employed individuals and landlords earning over £50,000, with a further rollout to those earning above £30,000 in later phases.

 Over time, HMRC plans to expand MTD requirements to more taxpayers. Phase 2 (April 2027) will see thresholds lowered further, with MTD applying to self-employed individuals and landlords with qualifying income over £30,000. The planned final phase (April 2028) will see MTD for income tax apply to landlords and the self-employed with qualifying income over £20,000. 

With more changes to MTD on the horizon, early preparation and system adoption have never been more vital. 

MTD for self-employed individuals

Making Tax Digital for self-employed individuals requires digital record-keeping of all business income and expenses, quarterly submissions to HMRC, and a final end-of-year declaration. This replaces the single annual Self Assessment return with multiple submissions across the tax year.

Digital record-keeping requirements

MTD rules require individuals to maintain accurate digital records of income, expenses, and allowable deductions throughout the year. MTD-compatible software or bridging tools must be used to store and manage this data: paper records or standalone spreadsheets are not compliant unless connected to approved software.

Quarterly reporting to HMRC

Under MTD, self-employed individuals are required to make four quarterly submissions to HMRC, each summarising business income and expenses. These updates provide HMRC with a near real-time view of financial performance. At the end of the tax year, a final declaration will confirm total income, expenses, and tax liability.

Common challenges for the self-employed 

Making Tax Digital self-employed requirements pose challenges for individuals who currently rely on manual processes. Transitioning from spreadsheets or paper systems to digital tools requires time, training, and system changes. However, self-employed individuals must adapt to the new requirements: failure to comply with MTD self-employed rules can result in penalties, making early preparation essential.

MTD for Landlords

MTD for landlords applies to individuals with qualifying rental income and introduces stricter reporting and record-keeping obligations. Under the new MTD rules, landlords must digitise their accounting processes and submit regular updates to HMRC. 

Landlords’ income and expense reporting

Making tax digital for landlords requires all rental income and allowable expenses to be recorded digitally and submitted quarterly. This includes income from residential and commercial properties. Landlords with multiple properties must maintain clear, separate records for each income stream to ensure accurate reporting under MTD landlords’ requirements.

Digital software solutions for property portfolios

Landlords must use MTD-compatible software to ensure accurate record-keeping and efficient reporting. MTD cloud accounting software can automate data capture, categorise expenses, and generate compliant submissions. Smaller landlords may use simple tools, while portfolio landlords benefit from advanced systems that manage multiple properties and income streams. 

Using an accountant or advisor does not remove the obligation to comply with Making Tax Digital for landlords. Your accountant or tax advisor can offer support that helps landlords select appropriate MTD software. Choosing the right software can be a difficult process. Some software is used for submission-only, known as bridging software, whilst others manage the full end-to-end process. Rayner Essex as certified, authorised partners of the main cloud software providers and are not biased in offering specific solutions.   We can assist you with cloud accounting services suitable for your specific needs to ensure accurate, compliant submissions.

Who is exempt from MTD?

Making Tax Digital does not apply to every taxpayer, although most self-employed individuals and landlords will be required to comply. HMRC provides specific exemptions for individuals who are digitally excluded, including: 

• Individuals who cannot use digital tools due to age, disability, or location
• Individuals with limited access to reliable internet services
• In some cases, individuals with religious objections to digital technology may also qualify for exemption
• Landlords who are digitally excluded due to age, disability, or lack of access to reliable internet
• Partnerships – MTD ITSA will apply at a later, as yet unconfirmed date
• Non-UK residents or those using the remittance basis (SA109) – deferred until April 2027

Using an accountant or tax advisor does not exempt landlords or self-employed individuals from Making Tax Digital requirements. MTD obligations still apply regardless of whether submissions are managed internally or outsourced. However, professional advice plays a critical role in ensuring compliance, assessing your status and exemptions, selecting appropriate software, and avoiding reporting errors or penalties. Rayner Essex can also advise you on record keeping, depending on how involved you want to be, whether you need help in taking the right steps to compliant reporting, or prefer to fully outsource your tax reporting, we are here to support you.

Bridging software 

Bridging software allows self-employed individuals and landlords to remain compliant with Making Tax Digital while continuing to use spreadsheets. This software connects manual records to HMRC systems and enables digital submission of quarterly updates. Clients who prefer to maintain existing systems can use bridging tools to submit accurate returns without fully migrating to new platforms. 

This approach is particularly useful for individuals who are not digitally confident or who require additional support. To access support, clients can also outsource their tax reporting entirely to Rayner Essex, ensuring full compliance with minimal administrative burden. For more sophisticated businesses that are used to providing digital reporting, the latest changes provide an opportunity to improve and update your processes in line with MTD requirements. 

How to prepare for MTD: Practical steps

For landlords and self-employed individuals, preparing for making tax digital requires early planning and consistent record management. Businesses that already use digital systems should review and optimise their processes to ensure full compliance with MTD requirements. Here are some practical steps to follow: 

• Organise your financial data in a structured digital format for MTD implementation
• Keep your income and expense records updated throughout the tax year
• Choose tailored MTD software for landlords or self-employed needs
• Test your software systems to ensure compatibility with HMRC requirements
• Seek professional advice to manage compliance and improve reporting accuracy

These steps will help to reduce disruption and ensure a smooth transition to making tax digital requirements.

Why work with Rayner Essex to meet MTD requirements?

Rayner Essex provides support for making tax digital requirements, with specialist expertise across self-employed and landlord reporting. Our team helps clients select HMRC-compliant MTD software, implement accurate digital systems, and manage quarterly reporting obligations.

We work with a range of leading software providers, allowing us to recommend solutions tailored to your specific needs without bias. Our support goes beyond tax compliance: we can help you to identify tax-saving opportunities and improve your financial visibility through digital reporting and deep insights gained from quarterly reporting, helping you maximise your allowances and grow your business with confidence.

Rayner Essex offers a full range of services, including tax services, payroll processing, audits, VAT, and corporate finance. With our holistic approach and partner-led service, you’ll receive comprehensive support that strengthens both compliance and business performance. 

Contact Rayner Essex to ensure your transition to MTD is efficient, accurate, and fully compliant today.

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