Landlords and sole traders are staring down a critical deadline on 7th August 2026, marking their first quarterly reporting requirement under the Government's Making Tax Digital (MTD) initiative. As they prepare to submit income and expenditure data from April to July, or January to June for calendar quarter opters, confusion persists among accountants about the new system.
The MTD scheme now mandates digital records and quarterly updates for landlords and sole traders with qualifying incomes above £50,000, a significant shift from traditional annual self-assessment. This threshold will decrease further: to £30,000 in April 2027, and then to £20,000 in April 2028 – encompassing the majority of landlords.
Eriona Bajrakurtaj, Chief Executive of Major’s Accounts & Co, notes that widespread misconceptions continue. Some individuals believe they're exempt from the rules or will face quarterly tax payments, while others think placeholder updates can be submitted to HMRC, only to reconcile later. These misunderstandings highlight the need for clearer guidance and communication.
Despite the looming deadline, HMRC has confirmed no late-submission penalties for missed quarterly updates during the initial Making Tax Digital year. However, from 2027/28 onwards, repeated failures to meet deadlines may incur £200 penalties under a new points-based system – a deferral aimed at providing a transitional period for businesses and landlords to adapt.
Ms Bajrakurtaj advises taxpayers to engage proactively with the new system by starting record-keeping each quarter, selecting HMRC-compatible software, and integrating these practices into their routines. She also stresses that having real-time income, expense, and cash flow insights can be particularly beneficial for property owners, especially given broader regulatory changes like the Renters’ Rights Bill and challenging market conditions.