From 6 April 2026, landlords and sole traders must shift from annual tax reporting to quarterly submissions. HMRC has now published the official update notice setting out exactly what information you need to send every three months. The threshold for mandatory compliance is clear: if your business income exceeds £50,000, you're in. This is not optional.

The rule applies in phases. In April 2026, the £50,000 threshold applies. In April 2027, it drops to £30,000. By April 2028, anyone with business income above £20,000 must comply. This is Making Tax Digital for Income Tax Self Assessment (MTD ITSA) - the government's digital tax compliance system that replaces the traditional annual return for eligible businesses.

What You Must Report, and When

Every quarter, you must submit your income and expenses using Making Tax Digital compatible software. The quarterly periods run from 6 April to 5 July (quarter one), 6 July to 5 October (quarter two), 6 October to 5 January (quarter three), and 6 January to 5 April (quarter four).

Each quarterly update must contain a summary of your business income and expenses for that three-month period. If you have property income, HMRC's direction confirms the update must separately identify income and expenses from jointly let property (a property you own with another person, such as a spouse). You must use compatible software to create and preserve your business records digitally, then submit the quarterly update to HMRC electronically.

This requirement applies across the UK. The regulations underpinning this are The Income Tax (Digital Obligations) Regulations 2026.

Why Your Accountant Needs to Be in the Loop Now

Here's a worked example. Suppose you own two buy-to-let (BTL - properties purchased to rent out) properties generating £40,000 annual rental income combined, plus £15,000 from a freelance consultancy. Your total business income is £55,000, so you're caught by the £50,000 threshold from April 2026.

You must now report quarterly. Q1 might show £9,500 rental income, £2,000 in expenses (maintenance, insurance, interest). Your software generates the quarterly update. You (or your accountant) submit it to HMRC by the deadline. You repeat this four times a year, not once annually.

The practical implication is straightforward: your record-keeping must be continuous and digital-ready. Waiting until January to gather receipts is no longer viable under MTD ITSA. You'll need to track your position at the end of each quarter.

This is also why speaking to your accountant now is essential. If your accountant currently works from annual spreadsheets and paper receipts, that system breaks under MTD ITSA. You'll want compatible software in place before 6 April 2026. Your accountant should help you select it, set it up, and agree on a quarterly reporting schedule.

What Happens if You Miss a Deadline

HMRC references penalties for non-compliance under The Income Tax (Digital Obligations) Regulations 2026, but the government has indicated a phased penalties approach. Early compliance is expected to be met with some administrative grace. Even so, missing a quarterly update deadline is not acceptable once the rules are in force.

The update direction published on 27 March 2026 represents the final version of the rules. There are no further consultation phases. This is the law from 6 April 2026 onwards.

If your income is below these thresholds, you can still choose to comply voluntarily. But if you're above them, there's no exemption.