As regulatory changes continue to reshape the landscape for UK landlords and sole traders, the implementation of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) adds another layer of complexity to an already challenging environment. With other major shifts, such as the Renters’ Reform Bill, the end of Section 21 evictions, and increasing Stamp Duty rates, landlords alike must stay ahead of the curve to thrive.
Starting in April 2026, MTD for ITSA will require landlords and sole traders to digitize their tax records and make quarterly filings with HMRC. While this new tax filing system rolls out in stages, it’s crucial for businesses to begin preparations well in advance. Embracing this change early, and with the support of professionals like AcoBloom International, can ensure smooth and successful integration.
Requirements of MTD for Income Tax
Under the new MTD for ITSA rules, landlords and sole traders falling within the set annual income limits must keep and maintain digital records and use HMRC-recognized software to manage, track and do the Digital Filings. Below is the detail of the thresholds and years from which this needs to come into effect: –
- Landlords and Sole Traders with Annual Qualifying Incomes over £50,000 must begin digital filing in April 2026
- Landlords and Sole Traders with Annual Qualifying Incomes over £30,000 in April 2027.
- Spring statement has mentioned that MTD will also be extended to sole traders and landlords with turnover over £20,000 from April 2028. This move itself is anticipated to bring a further 900,000 sole traders and landlords within the new regime.
Effective from 2026, Sole traders and Landlords falling within the eligibility criteria must take following steps: –
- They will be required to send quarterly updates of their business income and expenditure to HMRC, which means 4 quarterly submissions per business.
- A final declaration is also required to be submitted to include other sources of Taxable Income such as savings and investment income. 1 annual final declaration submission per individual.
- Keeping the digital records and making filings via MTD-Compliant software.
Moving your clients to bookkeeping software instead of relying on paper records or spreadsheets will significantly streamline quarterly reporting. It also helps ensure compliance with digital record-keeping regulations.
MTD for Income Tax: Exemptions
- General partnerships are not yet required to join MTD for Income Tax.
- Sole traders and landlords may be exempt if they’re digitally excluded due to reasons like age, disability, location, religious beliefs, lack of a National Insurance number, or if they’re foster carers.
- Clients can apply for exemption; HMRC will decide, and appeals are allowed. However, the exemption process is not yet confirmed by HMRC.
The Growing Need for Accountants in the MTD for Income Tax Era
As MTD for ITSA reshapes the tax landscape, accountants have a unique opportunity to become strategic advisors to their landlord and sole trader clients. There are a range of various strategic points where accountants can add significant value. Accountants can deliver value by:
- Providing Guidance and Making MTD Easy: Acting as wise and steady partners during the shift to digital, helping clients adapt with minimal disruption.
- Smooth Digital Onboarding: Recommending suitable book-keeping software, ensuring smooth setup, and maintaining clean records will eliminate the last-minute stress.
- Business-Oriented and Pro-active Advisory: Instead of focusing only on Annual Tax filing, accountants can offer insights into portfolio management, tax-saving strategies, and long-term planning for property sales or inheritance. Quarterly updates would assist accountants to provide real-time insights.
- Cost Management: With increasing operational costs, accountants can help landlords budget effectively, avoid overspending, and make investment decisions that protect their profits.
- Navigating Legal Changes: With ever-evolving regulations, accountants can act as a trusted advisor, simplifying complex legal changes and guiding clients through the necessary steps.
- Offering Long-Term Strategic Support: By becoming involved in clients’ business decisions, such as buying, selling, or refinancing properties, accountants can provide valuable insights, ensuring landlords make informed choices.
As the property sector becomes more competitive, clients will increasingly look for accountants who can help them navigate both MTD and the broader challenges of managing a property business in a digital world.
How Outsourcing with AcoBloom International Can Ease the MTD Transition
With over 2.6 million landlords and sole traders expected to join MTD for ITSA between 2026 and 2028, the transition poses a major operational challenge for accounting firms. The need for quarterly digital submissions followed by an Annual Declaration would significantly increase the workload for accountants. This is where partnering with an experienced outsourcing provider like Acobloom International becomes invaluable.
By partnering with AcoBloom International, accountants can offload the routine, yet essential tasks such as bookkeeping, VAT Return Preparation, and quarterly reporting. This way, Accounting Firms can reduce the administrative burden while ensuring accurate and HMRC compliant submissions. AcoBloom’s dedicated teams are trained in UK accounting and tax standards, offering scalable and reliable support tailored to each firm’s needs.
This partnership allows accountants to:
- Focus on high-value advisory services, including tax planning, investment strategy, and financial forecasting.
- Offer clients a smoother transition to MTD, with proactive support and fewer last-minute issues.
- Maintain high service standards despite increasing demands.
- Build deeper client trust through year-round, strategic guidance rather than reactive compliance support.
Outsourcing with AcoBloom International not only ensures operational efficiency but also positions accountants to thrive in the MTD era — helping clients navigate change confidently while strengthening long-term relationships.
