making tax digital for sole traders and landlords

The widening scope of Making Tax Digital (MTD) is highlighting several issues, including the limited availability of the MTD for income tax pilot scheme, and low awareness of the recent expansion of MTD for VAT to all VAT registered businesses.

Pilot scheme

Although the functionality of the MTD for income tax pilot scheme is constantly evolving, HMRC is still restricting sign-up to small numbers, citing the need for detailed, individual guidance for users.

From July, taxpayers can join the pilot if they have the following types of income:

  • self-employment, even if there is more than one business;
  • UK property;
  • employment income; or
  • UK savings and dividend income.

Functionality to be added over coming months will mean that pilot scheme users will be able to claim relief in respect of personal pension contributions and the marriage allowance, and it will also be possible to report capital gains, pay voluntary class 2 NICs and make student loan repayments.

From April 2024 quarterly reporting requirements will become mandatory for any sole trader earning more than £10,000 each year from self-employment or property income e.g. this is likely to apply to some buy-to-let landlords, Air BnB letters, and if the rental amount exceeds the threshold, those who also rent out their home during periods away may also be required to comply with the new MTD for income tax requirements.

If you think this may apply to you and you don’t already use cloud accounting software to record your incomings and outgoings, get in touch with Jamie and he will arrange a demonstration of the options available to you.


MTD for VAT was extended to all VAT registered businesses from 1 April. Previously, it only applied to those above the £85,000 VAT registration threshold. 

Some new entrants will currently be in the process of preparing their first MTD compliant VAT return – although research indicates considerable misunderstanding as to how MTD for VAT differs from the previous electronic VAT return filing requirement. Some 30% of responders thought they had already signed up to MTD, when in fact they had not.

There will be something of a delay for those businesses who submit VAT returns annually. For example, with an annual accounting period running to 31 March 2023, the first MTD return will not need to be submitted until 31 May 2023.

As MTD progresses, stay up to date with HMRC guidance here.

Please get in touch if you require assistance with your MTD transition, or anything else related to accounting software and digital applications, our digitisation expert Jamie will be happy to assist.