Making Tax Digital (MTD) for Income Tax is one of the biggest changes to the UK tax system in decades. If you’re a sole trader or landlord, it’s important to understand what the new rules mean, when they apply to you, and how you can prepare to avoid deadline penalty points which may result in a fine.
At Promar, we work with thousands of farming businesses across the UK, helping sole traders stay compliant while reducing the administrative burden of financial management. Our experienced Farm Business Accountancy team can support you through every stage of Making Tax Digital for Income Tax (MTD for ITSA).
What is Making Tax Digital for Income Tax?
From 6 April 2026, HMRC is introducing Making Tax Digital (MTD) for Income Tax, replacing the traditional annual Self-Assessment process for many sole traders and landlords.
The aim is to modernise the UK tax system by encouraging digital record keeping and more frequent reporting, helping businesses:
- Keep more accurate financial records
- Reduce errors in tax reporting
- Gain better visibility of their tax position throughout the year
- Simplify compliance through compatible accounting software
Rather than submitting one annual Self-Assessment tax return, eligible taxpayers will need to keep digital records and submit updates to HMRC throughout the year.
Who will be affected?
Making Tax Digital for Income Tax will be introduced in phases based on qualifying gross income, not profit.
From 6 April 2026
Sole traders and landlords with qualifying income over £50,000
From 6 April 2027
Those with qualifying income over £30,000
Planned from 6 April 2028
Those with qualifying income over £20,000
Qualifying income includes the combined total of:
- Self-employed business income
- Property rental income
If you’re unsure whether you’ll fall within the new rules, Promar can help you assess your position.
What are the new requirements?
If you are affected by MTD for Income Tax, you’ll need to:
1. Keep digital records
Paper-based bookkeeping alone will no longer be sufficient.
Businesses will need to maintain digital records using compatible software such as Xero, ensuring income and expenditure are recorded accurately throughout the year.
2. Submit quarterly updates
Instead of one annual submission, you’ll provide four quarterly updates to HMRC.
These updates summarise your income and expenses and do not require any tax payment at the point of submission.
The standard reporting periods are:
| Quarter | Reporting Period | Submission Deadline |
| Q1 | 6 April – 5 July | 7 August |
| Q2 | 6 July – 5 October | 7 November |
| Q3 | 6 October – 5 January | 7 February |
| Q4 | 6 January – 5 April | 7 May |
Businesses may also be able to elect to report using calendar quarters as further HMRC guidance becomes available.
3. Complete the year-end process
Following the quarterly submissions, there will still be a year-end process consisting of:
- End of Period Statement (EOPS) to finalise business adjustments such as capital allowances and accruals.
- Final Declaration, replacing the current Self Assessment tax return and confirming all income sources and tax liabilities.
For many clients, this final declaration will continue to be completed by their accountant, while Promar supports the ongoing bookkeeping and quarterly reporting.
Do I need new software?
In most cases, yes.
Making Tax Digital requires businesses to use HMRC-compatible accounting software.
Promar already supports clients using Xero, allowing digital records to be maintained throughout the year and quarterly updates to be submitted directly to HMRC.
Our team can also help businesses transition from manual bookkeeping to digital systems
How Promar can help
Making Tax Digital doesn’t have to become another administrative burden.
Our Farm Business Accountancy specialists can provide a complete support service, including:
- MTD readiness assessments
- Initial setup and onboarding
- Configuration of compatible bookkeeping software
- Ongoing bookkeeping throughout the year
- Quarterly submissions to HMRC
- Liaison with your accountant to ensure a smooth year-end process
- Continued support as HMRC guidance develops
Our aim is to keep you compliant while allowing you to focus on running your farm.
Speak to Promar
Making Tax Digital represents a significant change for sole traders, but you don’t have to manage it alone.
Whether you’re already a Promar client or looking for expert support with your farm business accounts, our experienced team is here to help.
Contact Promar today to discuss how we can support your business with Making Tax Digital for Income Tax.
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