How Does Making Tax Digital Affect Landlords and Business Owners?

For many individuals and small businesses, these changes will mean adapting to new ways of keeping records and submitting tax information online.

At Wisteria, our tax specialists work with clients to help them understand what these changes mean, how to prepare, and how to stay compliant while maintaining peace of mind, knowing we’ve taken care of it for you.

So What Is Making Tax Digital? 

Making Tax Digital is an HMRC programme designed to replace paper-based and manual record keeping with digital systems. The goal is to make tax more efficient and reduce mistakes caused by traditional accounting methods.

The first phase of MTD began in 2019 for VAT-registered businesses, which are now required to keep digital records and file VAT returns using compatible software. 

The next major stage is MTD for Income Tax Self Assessment (MTD ITSA), which will directly affect landlords and self-employed business owners.

When Will The Changes Take Effect? 

The government plans to introduce MTD for Income Tax in stages. From April 2026, it will apply to landlords and self-employed individuals with a combined annual income from property or business activities above £50,000. 

From April 2027, the threshold will fall to £30,000. Future phases are expected to include smaller businesses and landlords with lower incomes.

If you are a limited company, MTD for Corporation Tax will eventually follow, although this will be introduced at a later date. 

At present, MTD for Income Tax only applies to unincorporated landlords and sole traders who meet the income criteria.

How Does Making Tax Digital Affect Landlords?

For landlords, MTD represents a major shift in how property income and expenses are recorded and reported. Instead of keeping manual records or spreadsheets, landlords will need to use HMRC-approved digital software to maintain financial information.

You will also need to submit quarterly updates to HMRC showing income and allowable expenses, rather than waiting until the end of the tax year to complete a self-assessment. 

At the end of the year, you will send a final declaration to confirm your overall position, including any adjustments, reliefs, or other income.

This process aims to make tax reporting more accurate and to give landlords a clearer, more up-to-date view of their tax position throughout the year.

How Does MTD Affect Business Owners?

If you are self-employed or run a small business, the MTD business tax system in the UK will affect you in a similar way. You will be required to keep digital records of your income and expenses and submit quarterly summaries to HMRC using compatible software.

For many business owners, this will mean adjusting bookkeeping processes, updating software, and reviewing how financial information is managed. Businesses that use spreadsheets or manual systems will need to move to approved digital tools that meet HMRC’s data submission requirements.

The introduction of digital tax submission in the UK is designed to reduce the likelihood of human error and provide a clearer picture of a business’s financial health throughout the year, not just at year-end.

Key Benefits of Making Tax Digital

Although MTD introduces new requirements, it also offers several advantages for landlords and business owners who adapt early.

Keeping digital records provides better visibility over cash flow and allows you to monitor profits and expenses in real time. Submitting tax information quarterly can help identify potential issues sooner, rather than waiting until the annual tax return.

Using compatible accounting software also ensures better accuracy and can streamline the preparation of reports, saving time and reducing stress at year-end. 

With professional guidance, MTD can even make tax management more efficient and less time-consuming in the long run.

Common Challenges and How to Prepare

Adapting to digital tax submission in the UK may feel daunting at first, particularly for those who have relied on traditional record-keeping methods. 

The most common challenges include choosing the right software, understanding the quarterly reporting requirements, and maintaining accurate records.

Preparation is key. Start by reviewing your existing accounting systems and ensuring they can integrate with HMRC-approved software. 

Keep your records up to date throughout the year rather than waiting until deadlines approach. You should also familiarise yourself with the timing of quarterly submissions and ensure you allow for the final declaration at the end of each tax year.

Working with an accountant can make the transition smoother and ensure your records are accurate, compliant, and organised from the start.

How Wisteria Can Help

At Wisteria, we understand that tax changes can create uncertainty, especially for landlords and small business owners who already have a great deal to manage. 

Our experienced team of Chartered Accountants provides tailored advice and practical support to help you meet your obligations under Making Tax Digital.

We can help you choose the right software, understand the quarterly submission process, and manage your records efficiently throughout the year. Our goal is to make tax compliance simple, giving you confidence that everything is handled correctly and on time.

If you are unsure how Making Tax Digital will affect you or would like help preparing for the changes, contact Wisteria today. 

We’re here to guide landlords and business owners across the UK through the next stage of digital tax reporting with clarity and confidence.