864k landlords and self employed dragged into MTD

The first phase of MTD for Income Tax will kick in from April 2026 requiring individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out. The first quarterly filing date is set for 7 August 2026 and a new penalty system for non compliance will be in force.  

Initially MTD will only affect higher earners in this cohort, but quarterly filing will be quickly rolled out to a wider audience with the threshold dropping to £30,000 in April 2027 dragging in 1,077,000 individuals, then falling to a negligible £20,000 from April 2028 with another 975,000 required to report.

Around 2.9 million (42%) of which have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023-24.

From April 2026 businesses with a qualifying income over £50,000 will need to join MTD. Based on tax year 2023-24 there are 864,000 individuals with a qualifying income over £50,000.

For many of these landlords and self employed people, the new MTD requirements will be onerous, and they will be reliant on HMRC notifications about the changes as 25% of the £50,000 earners do not have an accountant or tax adviser.

Authorised agent representation falls in line with qualifying income. For those in the £30k-50k bracket, 37% do not have an accountant, while only 41% are represented in the £20k-30k band.

Of greater concern is the very large number of people who will need to invest in software to file their MTD reutrns. Currently only half of landlords and self employed used commercial software to submit their end of year self assessment tax returns.

Not only will they be faced with a total overhaul of the tax return process, but they will also have to shell out money for software, usually charged on a monthly basis for around £20, equivalent to an annual subscription cost of up to £240 a year.

At the same time, 37% of £50,000 plus individuals did not use software to submit their end of year return for 2023-24 meaning they will have to invest in software to file their quarterly returns, adding to business costs.

Going down the earnings scale, use of software drops off, with only half of the £20k-£50k bracket using software to file their tax returns.

Software use is much higher for those who have authorised agent representation. For businesses with an authorised agent and over £50,000 qualifying income, 78% used commercial software to submit the end of year return, while only 21% for those without an authorised agent.

Number of self employed and landlords under MTD for Income Tax

Source: HMRC

A list of both currently available software and that in development is available here

Please contact us if you need any advice about MTD IT.

Looking for advice? Check out our full range of services. From payroll help to taxation advice, our expert team is available to lend a hand.