Tax services
Making Tax Digital (MTD) Accountants for Sole Traders and Landlords
Making Tax Digital for Income Tax (MTD for ITSA) means four quarterly updates a year, due 7 August, 7 November, 7 February and 7 May, and a tax return filed through your software by 31 January. The real question is who runs it: you, or a Making Tax Digital accountant.
Merit runs an MTD for Income Tax service for sole traders and landlords, starting with a check of whether, and from which April, you are in scope. Merit is led by Chartered Tax Advisers, and our team includes professionals who have worked inside HMRC. In most cases, the tax we save our clients exceeds the fee they pay.
Making Tax Digital accountants in Manchester, London and Hertfordshire, working with landlords and sole traders across the UK. Fixed fees. Free first meeting.
If you are a landlord, gross rent counts in full towards the test, so Making Tax Digital can reach you even when your profit is small. Our accountants for landlords page covers the thresholds, the quarterly deadlines and the wider property tax changes in one place.
Are you caught by MTD for Income Tax?
Thirty seconds of arithmetic will tell you.
Qualifying income is your gross income from self-employment and property, before expenses. That means turnover, not profit. Self-employed CIS subcontractors are tested on gross turnover too. The two sources are added together. Employment, partnership profit shares, dividends and pensions do not count.
- Over £50,000: you started on 6 April 2026.
- Over £30,000: you start on 6 April 2027.
- Over £20,000: you start on 6 April 2028.
Here is what catches people. HMRC tests that figure on your return for the tax year two years before you start. April 2026 was decided by your 2024/25 return, April 2027 by your 2025/26, April 2028 by your 2026/27. HMRC may write to you, but the obligation is yours, which is why we check it first.
Example
You let one flat at £1,850 a month, so £22,200 of gross rent, and do consultancy work with turnover of £31,000. If those were your 2024/25 figures, qualifying income was £53,200. Over the line, so you were mandated from 6 April 2026. Your taxable profit after expenses may be nearer £28,000, but the test ignores that figure.
Warning
Two income sources that each look small can combine to put you over. The test ignores expenses entirely.
For scope, exemptions and what an update contains, read our MTD for Income Tax guide. This page is the service.
What happens each quarter if we run your MTD?
Four updates a year per business, filed from your digital records.
| Quarter | Standard period | Calendar option | Due |
|---|---|---|---|
| One | 6 April to 5 July | to 30 June | 7 August |
| Two | 6 July to 5 October | to 30 September | 7 November |
| Three | 6 October to 5 January | to 31 December | 7 February |
| Four | 6 January to 5 April | to 31 March | 7 May |
The calendar option is elected in your software before the first update of the year. It moves period ends to month end, not the deadlines.
We collect or review your records, categorise the transactions, query anything odd before filing, submit from MTD-compatible software, and confirm HMRC has it.
Updates are cumulative. Each restates the year to date, so a quarter one error is corrected in quarter two with no separate amendment. A sole trade plus a property business means eight updates a year.
Note
A quarterly update is not a tax calculation and does not change when you pay. At the end of the year you still file your Self Assessment tax return by 31 January, but through your MTD software rather than HMRC’s online service.
Each quarter you also get a tax forecast and tax planning advice, so planning comes up four times a year rather than once. In October there is still time to act on the current tax year; by the January filing deadline, the year being reported ended months ago.
Can you still use spreadsheets?
Yes, with one condition.
A spreadsheet can hold your digital records, but it cannot send anything to HMRC on its own. Bridging software links to the spreadsheet and sends the updates and the return. The link has to be digital, so figures must not be retyped from one into the other.
- Full MTD-compatible software with bank feeds and receipt capture: less typing, usually for a monthly subscription.
- Your existing spreadsheet, linked to bridging software: cheaper, and fine if your records are tidy.
We will tell you which fits, and say so if your spreadsheet is not tidy enough. HMRC publishes a list of compatible products, including free ones with transaction caps. Merit is a Xero Platinum partner, a tier reached through the volume of clients we run on the platform. We take no commission from any software vendor and we will recommend bridging software over a subscription if that is what your records need.
How do our MTD accountants run it for you?
Onboarding for our MTD for Income Tax service runs as one sequence, usually inside two weeks.
- We check whether you are caught, and from which April, using the correct test year.
- We choose and set up your software, then migrate your records, so your year to date is complete.
- We confirm our authorisation and sign you up. HMRC recognises an existing Self Assessment authorisation for MTD, so if we already act for you we copy it into our agent services account; if we do not, we send you a request to approve online. We act as your main agent, because a supporting agent cannot submit your tax return. We then sign you up for MTD for Income Tax, which authorisation alone does not do.
- We run your bookkeeping, or review yours. Both work; reviewing records you keep yourself costs less.
- We prepare and submit every quarterly update, then your tax return.
- We forecast your tax every quarter, instead of once in January.
Tip
Already with another accountant? Switching mid-year is routine, and we handle the clearance and the authorisation.
What does MTD mean if you are a landlord?
MTD for landlords has four wrinkles.
- One business, four updates. All your UK property is one property business. Five flats do not mean twenty updates a year. They mean four.
- Overseas lettings. All your foreign property is a second, separate property business with its own four updates, and its gross rent counts towards the threshold if you are UK resident.
- Joint property. Only your share of the gross rent counts, so a 50% owner of a property producing £60,000 counts £30,000. Updates need only your share of the income. Your share of the expenses can be left out of the quarterly updates and added once, before the tax return is filed.
- Property and trading together. Property and self-employment are reported separately but combined for the threshold test.
For ways to cut the tax itself, see our guide to reducing tax on rental income.
What about Making Tax Digital for VAT?
Making Tax Digital for VAT has applied to all VAT-registered businesses, whatever their turnover, for VAT periods starting on or after 1 April 2022, unless HMRC has granted an exemption. VAT records have to be kept digitally and returns filed through compatible software, usually quarterly. The return and the payment are normally both due one calendar month and seven days after the end of each VAT period.
If you are VAT registered and also have self-employment or rental income, the two regimes now run side by side on separate deadlines. We handle VAT returns alongside the quarterly income tax updates, so one set of digital records feeds both, and every VAT return we prepare is reviewed by a second tax specialist before it is submitted.
What does MTD cost, and what do the penalties look like?
There are three costs: software, your time and penalties. We do not publish fee figures because the work varies. Ask, and we quote a fixed fee.
Late submission runs on points. One point per missed quarterly update or return deadline. At four points, a £200 penalty, then another £200 for each miss after that. Below four points, each point expires after 24 months. Once you reach four, they stay until you meet two conditions: twelve months of on-time submissions, and every outstanding submission from the previous 24 months filed.
Late payment is separate and steeper. Nothing for the first 15 days. Then a charge at day 15, another at day 30, and from day 31 an annualised 10% accruing daily. For 2026/27 both fixed charges are 3%. From 2027/28 they become 4%.
Note
If you joined in April 2026, your first year is lighter. No late submission points are charged for quarterly updates due in 2026/27, though a late 2026/27 tax return still earns a point. That easement is not repeated for people who join in April 2027 or April 2028. In your first year under the new payment penalties you get 30 days from the due date to pay or agree a plan, rather than 15.
Example
Take 2027/28. You miss all four quarterly updates: four points, a £200 penalty. The return is late too, so another £200. And a £9,400 balancing payment sits unpaid four months. At day 15, 4% is £376. At day 30, another 4% adds £376. From day 31, 10% a year for 90 days, £232. Roughly £1,384 before interest.
A wrong quarter is cheap to fix, because the next update restates the year to date. The expense is elsewhere: a wrong quarter leads to a wrong forecast, too little set aside and a surprise in January.
Watch: Making Tax Digital for Income Tax explained
MTD for sole traders and landlords: your questions
I missed a quarterly update deadline in 2026/27. What happens now?
File it. HMRC charges no penalties for missing a quarterly update deadline in the 2026/27 tax year, so a late update costs nothing in penalty terms. Updates are still compulsory, and because they are cumulative, the next one puts the year right. From 2027/28 each missed update earns a point.
How does agent authorisation work, and do you need my HMRC login?
No, we never ask for your Government Gateway credentials. If we already act for you on Self Assessment, HMRC recognises that authorisation for MTD and we copy it into our agent services account. If we do not, we send you a request through our agent services account and you approve it online. We act as main agent, because a supporting agent can file quarterly updates but cannot submit your tax return. If another adviser stays as your main agent, we can act as supporting agent for the quarterly updates only.
Can you take over part way through the tax year?
Yes, and it is common. Because quarterly updates are cumulative, we do not need to unpick what you filed. We rebuild the year to date from your records, correct anything miscategorised, and the next update carries the corrected figures forward.
Which software will you put me on?
Whichever suits your records. If your bookkeeping is already tidy in a spreadsheet, bridging software is usually cheaper. If you type bank lines by hand, a bank feed pays for itself.
I have a job and one rental. Am I caught?
Employment income does not count towards qualifying income, so only your gross rent is tested. One property producing £25,000 of rent leaves you outside MTD until April 2028, when the threshold falls to £20,000, tested on your 2026/27 return. Add self-employed turnover, though, and the two figures combine.
Does MTD mean I pay tax four times a year?
No. Quarterly updates are information, not tax calculations, and they do not change your payment dates. Tax is still due by 31 January after the tax year ends, with payments on account on 31 January and 31 July. You just see it coming.
Do I have to do the bookkeeping, or can you?
Either. Some clients keep records in the software and we review, correct and file. Others send bank statements and invoices and we do all of it. For sole traders we also prepare the year-end accounts that sit behind the return. Reviewing your records costs less; doing them ourselves takes the work off you entirely. The filing is the same either way. Your digital records for each quarter must be in the software before that quarter’s update is sent, and in any case by its deadline.
Ready to hand MTD to somebody else?
Bring your last tax return, a note of your gross rents and turnover, and whatever records you keep. We will tell you which April applies, which software you need, and the fixed fee.
Chartered Certified Accountants and Chartered Tax Advisers. Our team includes professionals who have worked inside HMRC. Our partners have built their own businesses from nothing to over £1m in turnover. We have three offices and work on fixed fees.
Last reviewed: October 2026.
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