Making Tax Digital: Complete Guide for Self-Employed & Landlords in London
Making Tax Digital is changing how self-employed individuals and landlords report tax to HMRC. This guide explains who needs to comply, what changes, and how to prepare before the new rules apply.
Making Tax Digital (MTD) is changing how self-employed individuals and landlords in London report their taxes to HMRC. This guide covers the essentials: who needs to comply, key deadlines, and how to prepare.
What is Making Tax Digital?
MTD replaces traditional annual Self Assessment with digital record-keeping and quarterly reporting. You will maintain digital records and submit updates to HMRC four times per year using approved software.
Important: MTD changes how you report income, not how much tax you owe. You still make an annual declaration, but the process and frequency change.
Who Needs to Comply?
MTD is being introduced gradually based on income thresholds:
| Start Date | Annual Income |
|---|---|
| 6 April 2026 | £50,000+ |
| 6 April 2027 | £30,000+ |
| 6 April 2028 | £20,000+ |
For landlords: Your share of rental income counts toward the threshold. Joint owners should track their individual share carefully.
What You Need to Do
Submit Quarterly Updates
Report income and expenses every quarter through HMRC-approved software instead of waiting until year-end.
Use Digital Record-Keeping
Keep all financial records digitally from the start of your tax year. Paper records will not satisfy MTD requirements.
Submit Final Declaration
After your quarterly updates, submit a final annual declaration through your software.
Penalties for Late Submissions
HMRC uses a points-based penalty system:
- Each late quarterly submission adds 1 penalty point
- 4 penalty points can lead to a £200 fine
- Points can expire if you maintain compliance
Important: Quarterly reporting does not mean quarterly tax payments. Tax is still paid on the normal HMRC schedule.
How to Prepare for MTD
Quick Preparation Checklist
- Choose HMRC-approved MTD software
- Start digital record-keeping immediately
- Set reminders for quarterly submissions
- Consider professional support for more complex cases
Common Questions
Do I still complete a Self Assessment?
Yes, but it becomes a final declaration submitted through MTD software rather than the traditional online return form.
Can I still use paper records?
No. MTD requires digital record-keeping and digital submissions using compatible software.
What if I have multiple rental properties?
You will need an organised digital system to track all properties accurately. Professional accountants can help with more complex portfolios.
Need Help with MTD Compliance?
121 Accounting helps self-employed professionals and landlords across London navigate Making Tax Digital, from software setup to quarterly submissions.
