With Making Tax Digital for Income Tax (MTD for IT) starting on 6 April 2026, now is the time to prepare for the changes ahead. Sole traders and landlords with income over £50,000 will be required to comply.
Under MTD for IT, businesses will need to submit four quarterly online submissions to HMRC, followed by a final declaration after the year-end. If you have both rental and trading income, you will need to submit separate reports for each.
That means five reporting periods will replace the single tax return currently in place.
Cloud accounting software for MTD for IT
The right cloud-based bookkeeping software can make MTD compliance simple and efficient. Depending on your current bookkeeping system, we can recommend cost-effective software solutions by Dext and Xero, such as:
Dext Solo
Designed for sole traders and landlords, Dext Solo enables you to upload rental and trading income in one place. To streamline processing, it is recommended to use a separate business bank account rather than a personal one.
Each quarter, you will submit a total for income and expenditure for your business and rental properties.
You can also show if you have several properties with shared ownership, eg. some property owned outright and others with a 50% share.
Xero Simple Plan
Xero now provides Simple Plan designed for non-VAT registered businesses. This plan allows you to link your bank accounts to save having to record transactions from scratch. You can easily add a photo of your expense invoices/receipts to each payment with the image stored securely in the cloud.
Other providers
Other software providers such as Freeagent, Quickbooks and Sage will also be offering an online solution to support MTD compliance.
Prepare for MTD for IT
Although HMRC have previously delayed the start of MTD for IT, this time, it is going ahead in April 2026. Please speak to your accountant sooner rather than later to ensure a smooth transition.
How UHY can help
Whether you’re new to digital bookkeeping or already using software, we can help you get set up with the right tools.
Your local UHY adviser is fully prepared to guide you through these changes and recommend the best cloud accounting solutions for your needs. It is likely that those affected first would have already heard from their local office. If you haven’t heard from your local office and you are affected by these changes, you should expect to hear from HMRC in the coming weeks.
The next step
For more information regarding the above, please get in touch with Alison Martin or your local UHY cloud accounting adviser.
