MTD for Income Tax: am I caught, and when?

From 6 April 2026, every UK sole trader and landlord with combined gross self-employment income plus gross UK property income above £50,000 per year is mandated into MTD for Income Tax. From 6 April 2027 the threshold drops to £30,000. From 6 April 2028 the threshold is expected to drop to £20,000. The threshold counts gross income before any expenses or mortgage interest. Employment income (PAYE), foreign income, pension income and investment income are not counted toward the threshold and are not affected by MTD ITSA.

Five things. First, keep digital records of all your business income and expenses in MTD-compatible software (Xero, QuickBooks, FreeAgent or specialist landlord software). Second, send four quarterly summary updates to HMRC, one within one month of each quarter end (so August, November, February and May for the standard April-to-April tax year). Third, send a final declaration confirming your annual position by 31 January after the tax year ends. Fourth, pay the tax due on the same 31 January deadline. Fifth, if you have property income and self-employment income, you submit separate quarterly updates for each income source.

No. MTD for Income Tax (MTD ITSA) applies only to sole traders and landlords filing through Self Assessment. Limited companies file Corporation Tax through CT600 returns and are not affected by MTD ITSA. Limited company directors taking salary plus dividends do still need to file Self Assessment if their personal income requires it, but the MTD ITSA quarterly filing requirement does not apply to them. This is one reason why some sole traders and landlords approaching the £50K threshold consider incorporating to a limited company before April 2026.

Our MTD for Income Tax Quarterly Service is £150 per quarter, which is £600 per year. That covers all four quarterly submissions, the year-end final declaration, MTD-compatible software setup (Xero, QuickBooks or FreeAgent), and ongoing compliance support. For sole traders previously paying around £495 to £695 for an annual Self Assessment, the cost rises slightly because the work is genuinely more (five filings instead of one, plus digital record-keeping setup). For landlords previously paying around £695 for SA with rental pages, the rise is similar. We bundle MTD into broader engagements where applicable.

HMRC operates a points-based penalty system for late MTD submissions. Each missed quarterly filing earns one penalty point. At four points (which would be a full year of missed quarterly submissions for someone filing quarterly) a £200 fixed penalty applies. Continued non-compliance triggers further £200 penalties. There are also separate penalties for late payment of tax due. The penalty regime is designed to be more proportionate than the old £100 fixed penalty for late SA, but for someone consistently missing deadlines the cumulative cost can exceed the cost of professional filing many times over.

Yes, in two senses. First, limited companies are not subject to MTD ITSA at all so the quarterly filing requirement disappears. Second, the personal Self Assessment for a director (covering salary and dividends) is generally simpler than full sole trader or landlord SA. However, incorporation is a major decision with its own tax considerations: corporation tax versus income tax, dividend tax rates rising in April 2026, the £505 per year accountancy fee uplift, and Section 24 not applying for landlords versus the 5% SDLT surcharge on company property purchases. The LOYALS Sole Trader vs Limited Company calculator gives the headline tax comparison. The £1,200 Tax Planning Workshop models the full position including pension and family planning.