Making Tax Digital is here: What sole traders and landlords across NI need to do now

Making Tax Digital for Income Tax is now live for the first group of taxpayers, and the next wave starts on 6 April 2027. If your qualifying income from self-employment and property was over £30,000 in the 2025/26 tax year, you are likely to be brought into the regime from April 2027. You will need to keep digital records, use MTD-compatible software and send quarterly updates to HMRC.

The first wave started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, based on their 2024/25 tax return. From 6 April 2028, the threshold drops again to over £20,000, based on the 2026/27 tax year. Partnerships are expected to join in future, but no start date has been confirmed.

This article is for sole traders, landlords and side-business owners across Northern Ireland, with particular attention to those with cross-border income between the UK and Ireland. It explains what MTD actually requires, who is in and out of scope, and what to do now rather than leaving everything until the deadline.

Where the rollout stands now

MTD for Income Tax is being rolled out in stages, based on qualifying income.

HMRC will review the figures on your latest submitted Self Assessment tax return and may write to you if you are in scope. However, HMRC will not sign you up automatically. You still need to check your position, choose software and register when required.

Our piece on Making Tax Digital explained covers the broader background, and our companion piece on Making Tax Digital and what UK and Irish businesses need to know covers the wider cross-jurisdictional context.

How qualifying income actually works

The threshold trips people up because it is based on gross income, not profit.

The key points are straightforward.

Qualifying income is turnover before expenses. A landlord with £35,000 of rental income and £8,000 of allowable expenses is still over the £30,000 threshold, even though the profit is £27,000.

Self-employment and property income are combined. A sole trader earning £18,000 from a trade and £15,000 from a rental property has £33,000 of qualifying income.

For jointly owned property, only your share counts. If you and your spouse jointly own a buy-to-let producing £40,000 of rent, each of you normally has £20,000 of qualifying income from that property.

Employment income, dividends, pensions and savings interest do not count towards the MTD threshold.

HMRC tests eligibility against your submitted tax return. The April 2027 threshold is based on your 2025/26 return.

For owners with multiple income streams, the answer to “am I in?” is rarely obvious without sitting down with the numbers. The starting point is your latest return. Our piece on the self-assessment tax returns guide for self-employed individuals in the UK and Ireland covers the underlying filing position.

What actually changes in practice

The old rhythm of keeping records through the year and filing one return by 31 January is being replaced by a more regular reporting cycle.

Under MTD, you will need to:

Keep digital records throughout the year using MTD-compatible software.

Submit quarterly updates summarising income and expenses.

Send separate quarterly updates for each relevant source, such as self-employment and property income.

Submit your end-of-year tax return through MTD software.

Continue paying tax on the normal Self Assessment payment dates.

Quarterly updates are not full tax returns. They are summaries of income and expenses created from your digital records. You still finalise the annual tax position after the tax year ends.

For the April 2027 wave, the first MTD year is 2027/28. The main deadlines are:

Once you are within MTD, you cannot rely on HMRC’s old online Self Assessment filing route for your MTD tax return. You must use recognised commercial software or an accountant with compatible software. Our piece on switching to cloud accounting for SMEs covers the broader move to cloud-based systems.

The Northern Ireland angle

If you are based in Northern Ireland and your self-employment or property income is only UK-based, MTD works in the same way as it does for taxpayers in Great Britain.

The extra complexity comes when you have property or business income on both sides of the border.

Irish rental income is Irish-source income and is taxable in Ireland under the Irish income tax system. It is normally reported through the Irish self-assessment return. If you are UK resident, it may also need to be reported on your UK tax return, with double tax relief claimed for Irish tax paid.

For UK-resident individuals, overseas property income reported on the UK return can be relevant when assessing MTD obligations, so do not assume Irish rental income is ignored. For non-UK residents, the position can differ because the UK return usually only reports UK-source income.

UK and overseas property businesses are reported separately under MTD, so the software setup needs to be right from the start.

Euro and sterling conversion, timing differences and the treatment of expenses need careful handling where income is reported in both jurisdictions.

For cross-border landlords, our pieces on managing overseas property and UK tax rules for individuals with income in multiple countries cover the broader picture. For the structural side, setting up a company in both the UK and Ireland and our piece on how to report foreign dividends and interest in the UK are relevant.

This is where good Cross-border tax advisory work pays for itself, particularly as both jurisdictions continue to push more activity onto digital systems.

For NI businesses, it is also worth noting that HMRC’s joint online filing service for company accounts and Company Tax Returns closed on 31 March 2026. From 1 April 2026, companies that previously used that service need commercial software, an agent or another approved filing method. This is separate from MTD for Income Tax, but it sits in the same wider move towards digital filing. Our piece on common tax mistakes expats make in the UK, Ireland, and Northern Ireland covers cross-border pitfalls in more detail.

Software: the practical choice you need to make

Choosing the right software is the biggest practical decision in your MTD preparation. The market includes Xero, QuickBooks, Sage, FreeAgent, bridging tools and some free or lower-cost options for simpler businesses.

The criteria that matter are:

HMRC recognition. The software must be MTD-compatible.

Suitability. A landlord with 2 properties needs something simpler than a sole trader with employees, stock and VAT.

Bank feeds. A clean bank connection makes quarterly updates much easier.

Cost. Software can range from free options to higher monthly subscriptions.

Support. First-time users moving from paper or spreadsheets need support more than advanced features.

Cross-border capability. If you have Irish-source income, multi-currency handling matters.

The mistake to avoid is choosing software in panic shortly before your start date. Choose it early, test it during 2026 and 2027, and arrive at the deadline already familiar with the workflow. Our digital bookkeeping team helps owner-managers and landlords pick and set up the right software.

The penalty regime is real

MTD uses a points-based penalty system for late submissions.

Each late quarterly update earns a penalty point.

For quarterly filers, the penalty threshold is usually 4 points.

Once you reach the threshold, a £200 penalty applies.

Every further late submission while you remain at the threshold triggers another £200 penalty.

HMRC has confirmed that there are no penalties for missing quarterly update deadlines in the 2026/27 tax year for the first MTD wave, although taxpayers still need to keep digital records and submit the updates before filing the annual MTD tax return. This soft landing does not remove the need to comply, and it does not apply indefinitely.

The April 2027 wave should not assume the same treatment unless HMRC confirms it. Treat the first year as a chance to build good habits, not as permission to ignore the system. Our pieces on how tax accountants help small businesses and how management accounts help SME owners cover the wider principle of clean records protecting you from preventable costs.

What to actually do in the next few months

If you are in the April 2027 wave, work through these steps before the end of 2026.

Assess your qualifying income for 2025/26. Pull the figures from your records or your accountant.

If you are close to the threshold, model it carefully. Joint property, multiple trades and cross-border income can change the answer.

Choose MTD-compatible software. Do not wait until the final weeks.

Get your Government Gateway access in order.

Move to digital record-keeping now, even before MTD applies.

Reconcile your records monthly.

Set reminders for quarterly deadlines.

Speak to your accountant about who files what.

The businesses and landlords who treat MTD as a multi-month project find it manageable. The ones who leave it to the last few weeks find it stressful and error-prone. Our piece on the key financial KPIs every SME owner should be monitoring monthly covers the monthly discipline that makes MTD easier.

Landlord-specific scenarios

Property income produces common MTD edge cases.

Joint ownership with a spouse. Each owner’s share counts separately.

Multiple properties owned in different proportions. The calculation is based on your total share across the property business.

Furnished holiday lets. The FHL tax regime was abolished from April 2025, so these are now generally treated within the ordinary property rules.

Property held through a limited company. Corporate landlords are outside MTD for Income Tax, although company filing has its own software requirements.

Mixed UK and overseas property. Overseas property can still matter for UK-resident taxpayers, so get advice before excluding it from your MTD review.

For landlords thinking through structure questions ahead of MTD or in light of recent rate changes, our piece on director loans after April 2026 covers a related company issue, and our piece on tax planning for UK businesses expanding overseas touches on broader cross-jurisdictional considerations.

Sole trader-specific scenarios

For sole traders, the common edge cases include:

A trade plus a small property. The income aggregates, and people often cross the threshold when each income stream is below it on its own.

Side businesses alongside employment. Employment income does not count towards qualifying income.

Multiple self-employed trades. The gross income from all self-employed trades is considered.

Cash-based businesses. The cash basis is now the default for many sole traders, but MTD-compatible software can support the correct basis for your business.

Seasonal trades. Quarterly updates still apply even if income is heavily seasonal.

For owner-managers also operating limited companies, our piece on protecting the family business with a family charter covers governance considerations, and our pieces on why internal audit supports business growth, the future of financial planning, and the value of independent accountants in a consolidating market cover broader strategic ground.

Exemptions and special cases

MTD does not apply to everyone with income over the threshold. Some exemptions are automatic, while others must be applied for.

Current exemption areas include:

People with qualifying income at or below the applicable threshold.

People without a National Insurance number before the relevant tax year starts.

Certain trustees, personal representatives and non-resident companies filing specific Self Assessment returns.

Some temporary exemptions, including certain cases involving averaging relief, qualifying care relief, trusts and estates income, or residence pages.

Some longer deferrals, including ministers of religion, Lloyd’s members and people claiming or transferring certain allowances such as Blind Person’s Allowance.

Digital exclusion, where it is not reasonable for the taxpayer to use digital tools because of age, disability, location, religious beliefs or another accepted reason.

Exemptions are technical. Some are automatic, some are temporary, and some need an application. Assuming you qualify without checking can leave you in scope by default.

When MTD problems become wider compliance problems

For most people, MTD is a learning curve and then a settled routine. For others, quarterly reporting will surface deeper compliance issues, such as missing records, undeclared income or inconsistencies between years.

Where MTD reveals that records do not support the position previously reported, the situation needs handling carefully. Voluntary disclosure to HMRC is usually better than waiting for an inconsistency to emerge during an enquiry.

Where the issues are more serious, our forensic accountants Northern Ireland team can reconstruct positions from primary records and present them clearly. Our pieces on what a forensic accountant does and when you need one, how forensic accounting helps in fraud investigations, and red flags of financial fraud in SMEs cover where this work fits.

If a sole trader or owner-led business is also under financial pressure, MTD compliance can be one of several issues coming to a head at the same time. Our corporate restructuring accountants team works with businesses across the UK and Ireland, supported by our pieces on how recovery accountants help improve cash flow, what an insolvency accountant does in business distress cases, and what happens to creditors during company insolvency.

The wider 2026/27 backdrop

When you plan for MTD, it makes sense to keep related tax changes in view.

The Section 455 charge on relevant close company loans rose from 33.75% to 35.75% for loans made or benefits conferred on or after 6 April 2026.

The basic and higher dividend tax rates rose by 2 percentage points from 6 April 2026, to 10.75% and 35.75%. The additional dividend rate remains 39.35%.

The capital allowances main writing down allowance rate dropped from 18% to 14% from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. Our business owner’s guide to capital allowances covers this.

The furnished holiday lettings regime was abolished from April 2025, with former FHL businesses generally brought into the ordinary property rules.

The Bank of England held Bank Rate at 3.75% on 30 April 2026. The ECB also held its key rates on 30 April 2026, with the deposit facility rate at 2.00%, the main refinancing rate at 2.15% and the marginal lending facility rate at 2.40%.

R&D tax relief continues to operate under the merged scheme for accounting periods beginning on or after 1 April 2024. Our pieces on what qualifies for R&D tax credits in the UK and Ireland, the companion R&D piece, and common mistakes businesses make claiming R&D tax relief cover the detail.

Land remediation relief remains valuable for those acquiring contaminated land. Our piece on land remediation relief explained covers who qualifies.

For payroll-related developments, our pieces on HMRC PAYE issues and salary sacrifice pension changes are worth reading. For VAT and cross-border issues, VAT compliance for businesses operating across the UK to Ireland border and cross-border payroll cover key ground.

For owners thinking longer term, how to prepare your business for sale and due diligence and its importance in business cover the data-quality side that MTD compliance naturally supports.

FAQs

When does Making Tax Digital for Income Tax start?

The first wave started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The second wave starts on 6 April 2027 for those with qualifying income over £30,000. The third wave starts on 6 April 2028 for those with qualifying income over £20,000.

What counts as qualifying income?

Qualifying income is your gross turnover from self-employment plus gross property income, before expenses. For jointly owned property, only your share counts. HMRC tests eligibility using the figures on your latest submitted Self Assessment return.

Do I need to use software for MTD?

Yes. You must use HMRC-recognised MTD-compatible software to keep digital records and submit quarterly updates. HMRC’s old online Self Assessment filing route is not the way to submit an MTD tax return.

How often do I have to file under MTD?

You need to send 4 quarterly updates per tax year and then submit your annual tax return through MTD software. Payment dates for tax have not changed.

What are the penalties for late MTD submissions?

A points-based system applies. Each missed quarterly deadline can create a penalty point. For quarterly filers, the threshold is usually 4 points, after which a £200 penalty applies, followed by further £200 penalties for further failures. A first-year easement applies to quarterly updates for the 2026/27 first wave, but that should not be treated as a reason to delay preparation.

Will my accountant still file my return?

Many accountants will file quarterly updates and the final MTD tax return for clients. Others will train clients to use the software directly. Either approach can work, but the software, access permissions and workflow need to be agreed before your start date.

What about Irish rental income for a Northern Ireland resident?

Irish-source rental income is taxable in Ireland and may also need to be reported in the UK if you are UK resident, with double tax relief claimed where appropriate. For UK residents, overseas property income can be relevant to MTD, so cross-border landlords should check their position carefully rather than assuming Irish income is outside scope.

Are limited companies in scope of MTD for Income Tax?

No. MTD for Income Tax is a personal tax regime for individuals with self-employment and property income. Limited companies are not in scope, although company tax filing has separately moved further towards commercial software since the closure of HMRC’s joint online filing service on 31 March 2026.

Get the right support in place

If you are in the £30,000 to £50,000 income band, MTD for Income Tax may apply to you from 6 April 2027, and the time to prepare is during 2026, not the final weeks before the deadline.

As the northern ireland accountants sole traders, landlords and owner-managers across the UK and Ireland turn to, SCC Chartered Accountants can help you get MTD-ready calmly rather than under deadline pressure. Our digital bookkeeping team handles software and record-keeping, our tax compliance team covers your wider filing position, our specialist tax team picks up any reliefs you should be claiming, and our SME business solutions team is there for broader operational support.

Get in touch with the SCC team for an MTD readiness review before your start date.