TL;DR: UK audit working paper outsourcing typically costs between £800 and £3,500 per audit file and delivers 40 to 60 percent cost savings compared to employing ACA qualified audit seniors with all-in annual costs of £60,000 to £75,000. Outsourced support includes lead schedules, substantive testing, and analytical reviews while meeting ISA UK 230 documentation standards. Hybrid offshore models complete working papers in two to three weeks versus three to five weeks in-house, freeing 50 to 60 percent of qualified staff time from documentation to focus on professional judgement and client relationships
Introduction
Making Tax Digital for Income Tax (MTD ITSA) represents the most significant change to UK self-assessment since its introduction in 1996. From April 2026, hundreds of thousands of sole traders and landlords must abandon paper records and annual tax returns in favour of quarterly digital updates submitted through HMRC-approved software.
The question “Am I affected by MTD for Income Tax 2026?” now ranks among the most-searched tax queries in the UK, with over 780,000 individuals trying to understand if the new rules apply to them. The answer depends on your qualifying income, business structure, and when your tax year begins – factors that determine whether you face mandatory compliance from April 2026, April 2027, or potentially never at all.
This guide provides a definitive threshold-based assessment tool, readiness checklist, and compliance roadmap for the April 2026 MTD rollout. Whether you are a sole trader earning £55,000, a landlord with £45,000 rental income, or an accountant advising 200 self-employed clients, you will find practical answers to navigate HMRC’s most ambitious digitisation project yet.
Acenteus CCA specialises in MTD compliance outsourcing for UK accountancy practices and businesses. Our hybrid UK-supervised model delivers white-label MTD support, quarterly submission services, and software integration – allowing you to focus on advisory work whilst we handle the digital compliance burden. Contact us for a complimentary MTD readiness assessment.
What Is MTD for Income Tax?
Making Tax Digital for Income Tax (also called MTD ITSA or MTD for self-assessment) is HMRC’s digital reporting system for self-employed individuals and landlords. Unlike the current self-assessment regime – where you file one annual tax return by 31 January – MTD requires quarterly digital updates throughout the tax year, submitted via MTD-compatible software.
The HMRC MTD initiative mandates three core changes for sole traders and property landlords:
- Digital record-keeping: You must maintain income and expenses digitally using HMRC MTD-compliant software (no more shoeboxes or paper spreadsheets)
- Quarterly updates: Submit income and expense summaries to HMRC four times per year (not full tax returns, but quarterly snapshots)
- Final declaration: Complete an end-of-period statement and final declaration after the tax year ends (this replaces the traditional self-assessment return)
The system mirrors MTD for VAT, which has applied to VAT-registered businesses since 2019. However, MTD for Income Tax is income-threshold based rather than universal, meaning many sole traders and landlords will never be mandated to join. Those wondering “what is MTD for Income Tax” should understand it fundamentally changes how self-assessment works in the UK.
Key terminology for MTD for Income Tax:
- Qualifying income: Self-employment profits plus property rental income (excludes PAYE, dividends, pensions, and savings interest)
- Quarterly updates: Summary submissions of income and expenses for each 3-month period
- End-of-period statement (EOPS): Annual confirmation that quarterly updates are complete and accurate
- Final declaration: Legal confirmation of total tax liability, submitted after EOPS (equivalent to filing your tax return)
- MTD software: HMRC-approved accounting software or bridging software that links to HMRC’s systems
Digital links: API connections between your record-keeping software and HMRC submission systems
MTD for Income Tax Thresholds: Am I Affected?
Your MTD obligations depend entirely on your qualifying income and when your basis period begins. The MTD threshold determines whether you must join Making Tax Digital for Income Tax or remain on traditional self-assessment.
April 2026 Mandate (Already Confirmed)
Who: Sole traders and landlords with qualifying income above £50,000
When: Mandatory from 6 April 2026 for those whose basis period begins on or after that date
The HMRC MTD income tax changes 2026 apply to self-employed individuals and property landlords whose combined qualifying income exceeds the £50,000 threshold. This means roughly 780,000 UK taxpayers face mandatory MTD for self-employed compliance from April 2026.
Qualifying income includes:
- Trading profits from self-employment (before tax, after expenses)
- UK property rental income (gross receipts from residential and commercial lets)
Qualifying income excludes:
- PAYE salary
- Dividend income
- Interest from savings
- Capital gains
- Foreign property income (unless you elect to report it via MTD)
- Pension income
Example 1: Sarah is a freelance graphic designer earning £62,000 in self-employment profits. She also has £8,000 PAYE income from part-time work. Her qualifying income is £62,000 (PAYE does not count), so she must join MTD from April 2026.
Example 2: James owns three buy-to-let properties generating £48,000 annual rental income. He also earns £15,000 in dividends from investments. His qualifying income is £48,000 (dividends excluded), so he is not mandated in April 2026.
April 2027 Mandate (Confirmed)
Who: Sole traders and landlords with qualifying income above £30,000
When: Mandatory from 6 April 2027 for those whose basis period begins on or after that date
When does MTD for self-assessment start for lower earners? The MTD threshold drops to £30,000 from April 2027, bringing an additional 500,000+ sole traders and landlords into the regime. This includes part-time self-employed individuals, smaller landlords, and those with mixed income sources.
Example: Emma runs a dog-grooming business earning £38,000 profit annually. She is not required to join in April 2026 (under £50k threshold) but must join from April 2027 when the MTD income tax threshold drops to £30,000.
April 2028 Potential Mandate (Unconfirmed)
Who: HMRC originally proposed extending MTD to those with qualifying income above £20,000 from April 2028
Status: This threshold extension has not been confirmed in recent legislation. HMRC may delay, modify, or cancel this phase depending on the 2026-2027 rollout success. The MTD updates from HMRC suggest they will review the £20,000 threshold implementation based on early feedback from mandated taxpayers.
Exemptions and Exclusions
You are exempt from MTD for Income Tax even if your income exceeds thresholds if:
- You are a limited company director paying yourself via PAYE/dividends (MTD for limited companies does not exist – MTD for Corporation Tax was scrapped in 2023)
- You only have PAYE employment income
- Your only income is from pensions, savings interest, or dividends
- You are a partner in a partnership (partnership MTD rules differ – partnerships join based on total partnership income, not individual partner income)
- You are digitally excluded due to age, disability, or remote location (apply for exemption via HMRC)
- You have religious objections to using computers (rare but recognised exemption)
Overseas landlords: If you are non-UK resident with UK rental property, you join MTD based on the same UK property income thresholds (£50k from April 2026, £30k from April 2027). MTD for landlords applies equally to UK residents and non-residents with UK property income.
Qualifying Income: What Counts?
“What is qualifying income for MTD?” generates 500+ monthly searches as taxpayers try to determine their MTD status. The answer determines whether you are in or out of MTD for Income Tax.
Self-Employment Profits (Count)
Your trading profit from self-employment counts as qualifying income. This is turnover minus allowable expenses.
Example: Turnover £80,000, expenses £35,000 = qualifying income £45,000 (under threshold for April 2026)
If you run multiple self-employed businesses, combine all trading profits. Operating a window-cleaning business (£30k profit) and a property maintenance business (£25k profit) gives qualifying income £55,000 – you are mandated from April 2026.
MTD for sole traders applies when total self-employment profits exceed the threshold, regardless of how many separate businesses you operate.
Property Rental Income (Counts)
UK property rental income counts as qualifying income for MTD. HMRC uses gross receipts (total rent received before expenses) for the threshold test, though some guidance suggests using profit. We recommend using gross receipts for the threshold assessment as this is HMRC’s stated approach in most published guidance.
Example: You receive £42,000 annual rent from two buy-to-lets. Mortgage interest, repairs, and agent fees total £18,000. Your rental profit is £24,000, but your qualifying income for MTD purposes is £42,000 (gross receipts) – you are mandated from April 2026.
If you have both residential and commercial property lets, combine all UK rental income. MTD for landlords HMRC guidance confirms both property types count toward the qualifying income threshold.
What Does NOT Count
These income types do not count toward MTD qualifying income thresholds:
- PAYE salary: Employment income is already reported via RTI (Real Time Information) by your employer
- Dividends: Investment income from shares
- Savings interest: Bank and building society interest
- Pension income: State pension, workplace pension, or personal pension
- Capital gains: Profit from selling assets
Foreign income: Overseas employment, property, or business income (though you can voluntarily elect to report foreign property income via MTD)
Mixed Income Scenarios
Scenario 1: £35,000 self-employment profit + £20,000 PAYE salary
Qualifying income: £35,000 (PAYE excluded)
MTD status: Not mandated April 2026, mandated April 2027
Scenario 2: £40,000 rental income + £10,000 dividends + £15,000 pension
Qualifying income: £40,000 (only rental income counts)
MTD status: Not mandated April 2026, mandated April 2027
Scenario 3: £28,000 self-employment profit + £25,000 rental income
Qualifying income: £53,000 (both count)
MTD status: Mandated April 2026
Basis Period Rules
You join MTD when your basis period begins on or after the threshold date. For most sole traders and landlords using standard tax years (6 April to 5 April), your basis period aligns with the tax year.
Standard scenario: Tax year runs 6 April 2026 to 5 April 2027. If your qualifying income exceeds £50,000, you must use MTD for this entire tax year.
Non-standard scenario: Some businesses use accounting dates other than 5 April (e.g., 31 December year-end). From April 2024, tax law changes eliminated most non-standard basis periods, but transitional rules may apply. If your business year does not end on 5 April, seek specialist advice on your MTD for Income Tax start date.
Quarterly Reporting: What You Must Submit
MTD for Income Tax replaces the annual self-assessment return with quarterly digital updates throughout the year. Understanding MTD quarterly reporting requirements is essential for compliance.
Four Quarterly Updates
You must submit four quarterly updates each tax year, reporting income and expenses for each 3-month period.
Standard quarterly periods (for 6 April-5 April tax year):
- Q1: 6 April-5 July (due by 5 August)
- Q2: 6 July-5 October (due by 5 November)
- Q3: 6 October-5 January (due by 5 February)
- Q4: 6 January-5 April (due by 5 May)
Each update has a one-month submission deadline after the quarter ends. The MTD deadline for each quarter is fixed, and late submissions trigger penalties (after the soft landing period ends).
What you report in quarterly updates:
- Total business income received in the quarter
- Total allowable expenses paid in the quarter
- Summary figures only (not itemised receipts, though you must keep digital records of all transactions)
What you do NOT report in quarterly updates:
- Tax calculations (HMRC calculates your tax position based on your updates)
- Adjustments for capital allowances, losses, or overlap relief (these come in the EOPS and final declaration)
- Non-business income like PAYE or dividends
End-of-Period Statement (EOPS)
After submitting all four quarterly updates, you must complete an End-of-Period Statement confirming the information is complete and accurate.
When due: Within 10 months of the tax year ending (by 31 January following the tax year)
What it includes:
- Confirmation that all quarterly updates are correct
- Adjustments for capital allowances, losses carried forward, or overlap relief
- Any amendments to earlier quarterly updates
The EOPS is when you finalise your profit calculation, similar to completing the self-employment pages of a self-assessment return.
Final Declaration
After the EOPS, you submit a Final Declaration confirming your total tax liability.
When due: By 31 January following the tax year (same deadline as current self-assessment returns)
What it includes:
- Total income from all sources (self-employment, property, PAYE, dividends, etc.)
- Tax reliefs and allowances
- Confirmation of tax owed
- Legal declaration that the information is correct
The final declaration replaces the self-assessment tax return. You pay any tax owed by the same 31 January deadline as under current rules.
Soft Landing Period (Penalty Relief)
HMRC introduced a 12-month soft landing period from April 2026 to March 2027, during which late submission penalties for quarterly updates will not be charged.
What this means:
- If you miss a quarterly update deadline in the 2026-27 tax year, you will not face immediate penalties
- Penalties for late final declarations and late payment of tax still apply
- The soft landing applies only to the first year of mandation
Why HMRC introduced this: To allow businesses and agents time to adapt to quarterly reporting without penalty pressure during the transition year.
After March 2027: Full penalties apply for late quarterly updates. Penalties range from £200 for updates 3 months late to daily £10 penalties for updates over 12 months late.
Digital Records: What You Must Keep
MTD for Income Tax requires digital record-keeping using HMRC-compatible software. Paper records, manual spreadsheets, and shoebox receipts no longer comply with the law once you are mandated.
Digital Record Requirements
You must maintain digital records of:
- Income: All business income, sales invoices, rental receipts
- Expenses: All allowable business expenses, purchase invoices, receipts
- Assets: Capital purchases and disposals (equipment, vehicles, property improvements)
- Other business information: VAT records if VAT-registered, mileage logs, inventory
Records must be:
- Digital: Stored in MTD-compatible software or spreadsheets linked to HMRC via bridging software
- Preserved for 5 years: From 31 January following the tax year (same retention period as current rules)
Available for inspection: HMRC can request digital records during compliance checks
What "Digital" Means
Digital records can be maintained using:
- Cloud accounting software: Xero, QuickBooks, FreeAgent, Sage (most comprehensive MTD solution)
- Desktop accounting software: Sage 50, TaxCalc, Andica (installed on your computer)
- Spreadsheets + bridging software: Excel or Google Sheets records linked to HMRC via MTD bridging software like 123 Sheets or MTD Bridge
- HMRC’s free software: Basic free tools for simple businesses
Paper records are not compliant once you are mandated. If you currently use paper invoices, handwritten ledgers, or receipts in folders, you must move to digital record-keeping before your MTD start date.
Linking Software to HMRC
Your chosen software must link directly to HMRC to submit quarterly updates. This is called “digital links” or API integration.
Compatible methods:
- Cloud accounting software with native MTD integration (Xero MTD, QuickBooks MTD, Sage MTD)
- MTD bridging software that reads your spreadsheets and submits to HMRC (123 Sheets, Aqilla Connect)
- Desktop software with HMRC API connections (TaxCalc, Andica)
Non-compliant methods:
- Manually typing data into HMRC’s online portal from paper records
- Emailing spreadsheets to your accountant for manual upload
- Using software without MTD-compatible API links
The key principle: data must flow digitally from your records to HMRC without manual transcription. All MTD-approved software must support this digital link requirement.
MTD-Compatible Software: Free and Paid Options
Choosing the right MTD software is your most important MTD decision. HMRC maintains a list of over 400 MTD-compatible products, ranging from free basic tools to £500/month comprehensive accounting systems. When researching “best MTD software”, consider your business complexity, budget, and feature needs.
Free HMRC-Approved MTD Software
HMRC offers free software for sole traders and landlords with simple tax affairs. Free MTD software for sole traders includes:
- HMRC’s own free software (basic income/expense recording)
- Bok (free for businesses under £85k turnover)
- TaxCalc (free version for sole traders)
- Capium (free tier for simple self-employment)
- 123 Sheets (Excel bridging software, free tier available)
HMRC free MTD software limitations:
- Basic income/expense tracking only (no invoicing, bank feeds, or payroll)
- Often limited to simple sole traders (landlords with multiple properties may need paid versions)
- No multi-user access or accountant integration
- Minimal support
Who free software suits: Sole traders with under £20,000 turnover, single-property landlords, or businesses with very simple income/expenses. Free MTD software for landlords is available but may lack multi-property management features.
Paid MTD Software (Most Popular)
For sole traders:
- QuickBooks Self-Employed: £6-£12/month, popular with freelancers, includes mileage tracking and expense categorisation, QuickBooks MTD integration
- FreeAgent: £10-£24/month, excellent for sole traders, bank feeds, invoicing, MTD for Income Tax compliance built-in
- Xero Early: £12/month, growing popularity, bank reconciliation and MTD compliance, Xero MTD for Income Tax support
For landlords:
- Landlord Vision: £10-£20/month, purpose-built for property portfolios, handles multiple properties, MTD software for landlords
- PropertyMe: £8-£15/month, rental income tracking and tenant management
- FreeAgent (also suitable for landlords): £24/month, includes property income tracking
For accountants managing multiple clients:
- Xero Practice: From £30/month per firm, unlimited clients, white-label MTD submissions, MTD software for accountants
- QuickBooks Accountant: Free for accountants, manage up to 50 client files, QuickBooks MTD for Income Tax
TaxCalc: £300-£1,000/year, desktop-based, popular with UK accountants, MTD for accountants features
MTD Bridging Software for Spreadsheet Users
If you prefer Excel or Google Sheets, bridging software for MTD links your spreadsheets to HMRC:
- 123 Sheets: £60-£120/year, reads Excel spreadsheets and submits MTD updates, MTD bridging software Excel compatibility
- Absolute Topup: £96/year, similar Excel bridging for MTD
- MTD Bridge: £72/year, Google Sheets compatibility, bridging software for MTD for Income Tax
How MTD bridging software works: You continue maintaining income/expenses in Excel. The bridging software reads your spreadsheet data and submits quarterly updates to HMRC via API. Excel MTD bridging software allows spreadsheet users to remain MTD-compliant without adopting full accounting systems.
Pros: Keep familiar spreadsheet workflows, lower cost than full accounting software, cheapest MTD software option
Cons: No automation, bank feeds, or invoicing; still requires manual data entry
MTD Compliant Software Selection Checklist
Choose MTD-compatible software based on:
- Business complexity: Simple income/expenses = free software; multiple properties or complex expenses = paid software
- Bank integration: Do you want automatic bank feeds (requires paid software)?
- Invoicing needs: Do you invoice clients (requires paid software with invoicing)?
- Accountant access: Does your accountant need to see your records (check accountant-compatible software)?
- VAT registration: If VAT-registered, ensure software handles both MTD for VAT software and MTD for Income Tax
- Budget: Free-£6/month for basic needs; £10-£25/month for comprehensive features
Best free MTD software depends on your specific needs, but HMRC’s own tool and TaxCalc free version suit most simple sole traders.
Registration and Enrolment Process
Once you know you are affected by MTD, you must register for MTD and set up your software before your first quarterly deadline. The sign-up for MTD process takes 2-3 months for proper preparation.
Step 1: Check Government Gateway Account
You need a Government Gateway ID (the same login used for self-assessment). If you do not have one, create an account at www.gov.uk/log-in-register-hmrc-online-services. You will receive an activation code by post within 7 days. This is required for HMRC MTD login access.
Step 2: Register for MTD for Income Tax
When to register: At least 2 months before your first quarterly update is due (to allow time for software setup and testing)
How to register for MTD:
- Log in to your HMRC online account
- Select “Making Tax Digital for Income Tax”
- Confirm your details (name, UTR, business start date)
- HMRC will issue your MTD activation code
Agent registration: If your accountant will submit MTD updates on your behalf, they must have agent authorisation and register you through their HMRC MTD agent login account.
Step 3: Choose and Set Up Software
Select MTD-compliant accounting software from HMRC’s approved list (www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax). Choose from MTD-approved software, MTD compliant software, or HMRC-approved MTD software on the official list.
Setup tasks:
- Create your account with the software provider
- Connect the software to HMRC using your MTD activation code
- Import or enter opening balances (if starting mid-year)
- Set up income and expense categories matching your business structure
Most software providers offer setup guides or onboarding calls (especially paid products). MTD for ITSA software typically includes onboarding support.
Step 4: Test Submission
Submit a test quarterly update before your real deadline to ensure your software connects correctly to HMRC.
What to test:
- Software logs into HMRC successfully
- Quarterly update submits without errors
- You receive a submission receipt from HMRC
Testing takes 10-15 minutes and avoids last-minute technical problems during real quarterly deadlines.
Step 5: Maintain Records and Submit Quarterly
From your MTD start date, maintain digital records continuously and submit quarterly updates by each deadline.
Quarterly workflow:
- Record all income and expenses in your software throughout the quarter
- Reconcile bank accounts at quarter-end
- Review income/expense totals for accuracy
- Submit quarterly update via software by the deadline (one month after quarter-end)
Retain HMRC submission receipt
Penalties for Non-Compliance
MTD introduces new penalty regimes for late submissions and late payments. While the soft landing period offers temporary relief in 2026-27, full MTD penalties apply from April 2027.
Late Quarterly Update Penalties
From April 2027 (no penalties during 2026-27 soft landing):
- 1 day to 3 months late: Written warning (first offence), then £200 penalty
- 3 to 6 months late: Additional £200 penalty
- 6 to 12 months late: Additional £200 penalty
- Over 12 months late: Daily £10 penalties (up to £900) plus potential tax-geared penalties
Example: You miss your Q1 update deadline by 4 months. Penalty: £400 (initial £200 + 3-month additional £200).
Late Final Declaration Penalties
Late final declaration penalties mirror current self-assessment late filing penalties:
- 1 day late: Automatic £100 penalty
- 3 months late: Additional £10/day for up to 90 days (£900 maximum)
- 6 months late: Additional £300 or 5% of tax due (whichever is higher)
- 12 months late: Additional £300 or 5% of tax due (whichever is higher)
Example: Your final declaration for 2026-27 is due 31 January 2028. You submit it on 15 March 2028 (43 days late). Penalty: £100 + (43 x £10) = £530.
Late Payment Penalties
Tax payment penalties remain unchanged:
- 30 days late: 5% of unpaid tax
- 6 months late: Additional 5% of unpaid tax
- 12 months late: Additional 5% of unpaid tax
Interest accrues daily on unpaid tax from the due date until paid (currently 7.75% annual rate).
Penalties for Inaccurate Information
If your quarterly updates or final declaration contain inaccuracies, HMRC can charge:
- Careless errors: 0-30% of tax understated
- Deliberate errors: 20-70% of tax understated
- Deliberate and concealed errors: 30-100% of tax understated
Penalties reduce significantly if you disclose errors voluntarily before HMRC discovers them.
MTD Readiness Checklist
Use this MTD compliance checklist to prepare for MTD compliance before your April 2026 deadline.
3 Months Before MTD Start Date
- Calculate your qualifying income for the current tax year (confirm you are mandated)
- Check your Government Gateway account login works
- Research MTD-compatible software options (free vs paid, compare best MTD software for sole traders)
- If using an accountant, confirm they offer MTD submission services
- Review current record-keeping (identify what must move from paper to digital)
2 Months Before MTD Start Date
- Register for MTD for Income Tax via HMRC online services
- Receive MTD activation code from HMRC
- Purchase/subscribe to chosen MTD accounting software
- Set up software account and link to HMRC using activation code
- Import or enter opening balances and prior-year data
- Configure income/expense categories in software
1 Month Before MTD Start Date
- Complete software training (watch provider tutorials or book onboarding call)
- Submit test quarterly update to verify HMRC connection
- Move all paper records to digital format (scan receipts, enter historic transactions)
- Set up bank feeds if using MTD cloud accounting software
- Create quarterly submission calendar with reminders for each MTD deadline
- Agree MTD service scope with your accountant (if using one)
First Quarter of MTD
- Record all income and expenses digitally as they occur
- Reconcile bank accounts weekly or monthly
- Review profit/loss position mid-quarter to track progress
- Submit Q1 update by deadline (5 August for standard tax year)
- File HMRC submission receipt safely
- Schedule Q2 reminder
Ongoing Quarterly Routine
- Maintain digital records continuously (avoid end-of-quarter data entry marathons)
- Reconcile accounts before each quarterly deadline
- Review quarterly update for accuracy before submission
- Submit quarterly update at least 3 days before deadline (buffer for technical issues)
- After tax year-end, complete EOPS by 31 January
- Submit final declaration by 31 January
Pay tax due by 31 January (or second payment on account by 31 July)
How Acenteus CCA Supports MTD Compliance
MTD for Income Tax creates significant compliance burdens for sole traders, landlords, and accountancy practices. Acenteus CCA delivers white-label MTD outsourcing services that handle the digital compliance workload whilst you focus on growth and advisory services.
For UK Accountancy Practices
White-label quarterly submission services: We submit quarterly updates on behalf of your clients under your firm’s brand. Your clients never know you outsource – they see only your firm’s name and branding. MTD for accountants becomes manageable when you outsource routine compliance work.
Services included:
- Software setup and configuration for each client
- Importing client data into MTD-compatible software
- Quarterly reconciliations and update submissions (all four quarters)
- EOPS and final declaration preparation
- Client correspondence regarding MTD deadlines and queries
- HMRC liaison if submission issues arise
Pricing: From £15-£35 per client per quarter (£60-£140 per client annually), depending on complexity and client volume.
Why accountants outsource MTD: Quarterly submissions multiply your workload 4x annually. A practice with 200 MTD clients faces 800 quarterly submissions per year – an impossible burden for in-house teams already stretched by January deadlines. Outsourcing MTD frees your qualified staff for tax planning, business advisory, and new client acquisition.
For Sole Traders and Landlords
Managed MTD compliance: We handle your entire MTD obligation from software setup to final declaration.
Services included:
- MTD software recommendation and setup
- Government Gateway registration
- Ongoing digital bookkeeping (recording income and expenses)
- Quarterly update submissions
- EOPS and final declaration
- Tax payment reminders and planning
Pricing: From £600-£1,200 annually for sole traders with straightforward income/expenses; £800-£1,500 annually for landlords with multiple properties.
Who this suits: Busy sole traders and landlords who lack time or technical confidence to manage quarterly digital reporting themselves. MTD for small businesses is complex, and professional support ensures compliance.
Software-Agnostic Support
Acenteus works with all major MTD software platforms:
- Xero MTD, QuickBooks MTD for Income Tax, FreeAgent, Sage MTD
- TaxCalc, Andica, GoSimple Tax
- MTD bridging software (123 Sheets, Absolute Topup)
We adapt to your existing software or recommend solutions based on your business needs. Our UK-supervised team has deep expertise across HMRC-compatible platforms, ensuring seamless integration regardless of your technology stack.
Hybrid UK-Supervised Model
Our compliance delivery model combines:
- UK-qualified oversight: Every quarterly submission is reviewed by UK-chartered accountants or CTA-qualified tax advisers
- Offshore efficiency: Routine data entry and reconciliations handled by our offshore team (60% cost reduction vs full UK-based services)
- Quality assurance: Two-stage review process ensures accuracy before HMRC submission
This hybrid approach delivers Big Four quality at mid-tier pricing – typically 40-60% less than equivalent UK-only services.
Free MTD Readiness Assessment
We offer complimentary MTD readiness assessments for accountancy practices and businesses:
- Review your client base or income to confirm MTD mandation
- Evaluate current record-keeping and identify digitisation gaps
- Recommend software solutions based on business complexity
- Provide quarterly submission volume forecasts and cost estimates
- Create a 90-day MTD implementation timeline
Contact Acenteus CCA today to schedule your no-obligation MTD readiness assessment. We help 100+ UK accountancy practices manage MTD compliance for 5,000+ sole traders and landlords – let us handle your MTD burden so you can focus on what matters.
Frequently Asked Questions (FAQ)
MTD for Income Tax becomes mandatory from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The MTD threshold lowers to £30,000 from April 2027. HMRC originally proposed a £20,000 threshold from April 2028 but has not confirmed this. When does MTD for self-assessment start? April 6, 2026 for those above £50k qualifying income.
Qualifying income for MTD is your self-employment profits plus UK property rental income. It excludes PAYE salary, dividends, pensions, savings interest, and capital gains. If your MTD qualifying income exceeds the threshold, you are mandated to join MTD.
Yes, but you can continue using Excel with MTD bridging software. Bridging software like 123 Sheets or Absolute Topup reads your Excel spreadsheets and submits quarterly updates to HMRC via API. MTD bridging software Excel compatibility keeps your familiar spreadsheet workflow whilst meeting MTD requirements.
Yes. HMRC offers free MTD software for simple sole traders and landlords. Free options include HMRC's own tool, Bok, TaxCalc, and Capium. Free MTD software for sole traders suits businesses with basic income/expenses but lacks features like bank feeds, invoicing, or multi-property management. Best free MTD software depends on your specific needs.
For a standard 6 April-5 April tax year, MTD quarterly updates are due: Q1 by 5 August, Q2 by 5 November, Q3 by 5 February, Q4 by 5 May. Each MTD deadline is one month after the quarter ends. Your final declaration is due by 31 January following the tax year.
HMRC will not charge late submission penalties for quarterly updates during the first year of mandation (April 2026 to March 2027). This gives businesses time to adapt to MTD quarterly reporting. Penalties for late final declarations and late tax payments still apply. Full penalties for late quarterly updates start from April 2027.
No. MTD for limited companies does not exist. Limited companies do not file self-assessment returns, so MTD for Income Tax does not apply. MTD for Corporation Tax was scrapped in 2023. Company directors drawing PAYE salary and dividends are not affected by MTD for Income Tax.
Your qualifying income is £48,000 (PAYE excluded), so you are not mandated in April 2026 (under £50k MTD threshold) but will be mandated in April 2027 when the MTD income tax threshold drops to £30,000.
Yes. If you own three properties generating £20,000, £18,000, and £15,000 rental income, your total qualifying income is £53,000. You combine all UK rental income for MTD for landlords purposes, so you are mandated from April 2026.
Yes. Your MTD accountant can submit quarterly updates on your behalf if they have agent authorisation. Most accountancy practices offer MTD submission services, either in-house or via outsourced providers like Acenteus. Confirm your accountant's MTD service scope and pricing before April 2026. They will use HMRC MTD agent login to submit on your behalf.
During the 2026-27 soft landing, missing an MTD quarterly deadline triggers no penalty (though you must still submit the late update). From April 2027, late quarterly updates incur £200 penalties (after 3 months late), rising to £600 for updates over 6 months late, plus potential daily £10 penalties.
No. MTD replaces the annual self-assessment return with quarterly updates, an end-of-period statement (EOPS), and a final declaration. The final declaration (due 31 January) serves the same legal purpose as the traditional tax return, but data comes from your quarterly updates rather than manual entry.
No. MTD requires digital record-keeping from the outset. You cannot maintain paper records and retrospectively scan them for quarterly submissions. Income and expenses must be recorded digitally as they occur, using MTD-compatible software or spreadsheets linked to HMRC via MTD bridging software.
You combine both for the qualifying income threshold test. If your self-employment profit is £35,000 and rental income is £20,000, your qualifying income is £55,000 - you are mandated from April 2026. You report both income sources in your quarterly updates (most MTD accounting software allows multiple income streams).
Not legally, but many sole traders and landlords find MTD quarterly compliance overwhelming and engage accountants or outsourced services. Simple businesses with basic income/expenses can manage MTD independently using free or low-cost software. Complex businesses benefit from professional MTD accountants support.
Inaccurate updates can trigger penalties ranging from 0-30% of understated tax (careless errors) to 30-100% (deliberate concealment). However, if you discover errors and voluntarily amend your updates before HMRC finds them, penalties reduce significantly or disappear entirely.
Yes. HMRC allows voluntary MTD registration even if your income is below the mandatory threshold. Some sole traders and landlords join early to familiarise themselves with quarterly reporting before mandation. Voluntary participants must follow the same quarterly submission rules as mandated businesses.
For sole traders: QuickBooks MTD, FreeAgent, or Xero MTD for Income Tax. For landlords: Landlord Vision or FreeAgent. For spreadsheet users: 123 Sheets MTD bridging software. Accountants typically recommend MTD software for accountants they already use for other clients to streamline support and reduce training costs. Best MTD software for sole traders often depends on specific business needs.
Partnerships have separate MTD rules. A partnership joins MTD if total partnership income (combined for all partners) exceeds the MTD threshold. Individual partners do not join separately unless they also have sole-trade or rental income outside the partnership.
Contact Acenteus CCA for a free MTD readiness assessment. We evaluate your qualifying income, recommend MTD-compliant software, and provide implementation timelines. Whether you are a sole trader, landlord, or accountancy practice managing 200 MTD clients, we deliver tailored MTD compliance solutions at competitive rates.
INTERNAL LINKS (8):
- Acenteus CCA – https://acenteus-cca.com/
- MTD compliance outsourcing – https://acenteus-cca.com/tax-compliance-outsourcing-uk
- White-label quarterly submission services – https://acenteus-cca.com/outsourcing-for-accountants-uk
- tax planning – https://acenteus-cca.com/tax-advisory-services-uk
- Managed MTD compliance – https://acenteus-cca.com/accounting-services-small-businesses-uk
- MTD for VAT – https://acenteus-cca.com/blog/best-solutions-managing-making-tax-digital-compliance
- January deadlines – https://acenteus-cca.com/blog/how-to-solve-year-end-accounting-bottlenecks-with-outsourcing
Contact Acenteus CCA – https://acenteus-cca.com/contact-us
EXTERNAL LINKS (12):
- 6 April 2026 – https://www.gov.uk/government/collections/making-tax-digital-for-income-tax
- qualifying income – https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax
- HMRC’s approved list – https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax
- www.gov.uk/log-in-register-hmrc-online-services – https://www.gov.uk/log-in-register-hmrc-online-services
- MTD for VAT – https://www.gov.uk/guidance/making-tax-digital-for-vat
- quarterly reporting – https://www.icaew.com/technical/tax/making-tax-digital/mtd-for-income-tax
- late submission penalties – https://www.icaew.com/technical/tax/making-tax-digital/mtd-for-income-tax-penalties
- basis period – https://www.att.org.uk/making-tax-digital-frequently-asked-questions
- soft landing period – https://www.sage.com/en-gb/blog/mtd-for-income-tax-soft-landing-period-explained/
- Xero – https://www.xero.com/uk/guides/making-tax-digital/income-tax/
- QuickBooks – https://quickbooks.intuit.com/uk/making-tax-digital/
- FreeAgent – https://www.freeagent.com/guides/making-tax-digital/
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