By Matt Ryan, Director at McEwan Wallace
Let's be honest—when HMRC announces a “modernisation” of the tax system, most people don't immediately reach for the champagne. But like it or not, Making Tax Digital (MTD) is coming, and if you're a sole trader or landlord, it's going to change the way you report your income and expenses.
The big issue? According to recent research, nearly half of the UK's sole traders are still unprepared for the changes. That's not just unfortunate—it could be expensive.
So, what's changing?
MTD for Income Tax (MTD for IT, for short) is HMRC's plan to move tax reporting into the digital age. From April 2026, if you're a sole trader or landlord earning over £50,000, you'll need to:
- Use compatible software to keep digital records of your income and expenses
- Send quarterly updates to HMRC
- File your final tax return by 31 January each year, as usual
And this isn't a one-size-fits-all launch:
- The £50,000 threshold kicks in from April 2026
- It drops to £30,000 in 2027
- Then down to £20,000 in 2028
So, whether you're a well-established business or just earning a bit from a buy-to-let, MTD will likely catch up with you.
Why does this matter?
Because non-compliance could mean penalties, delays, and a lot more admin stress than you bargained for. And according to a survey by IRIS Software, a worrying number of sole traders haven't even heard of MTD—let alone started preparing.
In fact:
- 1 in 3 sole traders are unaware of MTD altogether
- 76% say they should probably know more about it
- Only 23% feel very prepared for the changes
On the bright side, some are taking a proactive approach: around a third said they're planning to get clued up on MTD in their own time. A small but loyal 7% said they're simply trusting their accountants to steer them in the right direction—which is where we come in.
What should you do now?
Whether you're tech-savvy or still clinging to that spreadsheet from 2004, the time to act is before this becomes a problem.
This isn't just a compliance issue—it's a chance to tidy up your finances, streamline your processes, and possibly even sleep better at night. Think of it as giving your business a digital MOT.
At McEwan Wallace, we're helping clients get ready for the transition, making sure the switch to digital isn't a painful one. We'll walk you through the software, the reporting, and everything in between—no jargon, no nonsense.
Give us a call, drop us a line, or pop in for a chat. We'll help you prepare so that when MTD finally kicks in, you won't be caught on the back foot.