Your football club becomes the beating heart of your town or city—where communities come together, stories are passed down through generations, and buzz begins long before the stadium doors open.
That’s why Sage is the official accounting software partner of the English Football League (EFL), a competition built on the spirit of local communities—powered by the small businesses, volunteers, and everyday legends who make football what it is.
Matchday starts days or weeks earlier, in the bakery, the barbershop, the ticket office, or the pub.
“70% of fans eat or drink locally before or after a match.”
EFL Supporters Survey 2024
As someone who’s seen the whole game through, from pitch to boardroom, former England and Manchester United defender, Gary Neville, knows how vital small businesses are to football culture and community life.
Now successful businessman and EFL club co-owner, in the video above, he shares what football looks like behind the scenes and tells us why the business side of football matters more than ever—and what we can all learn from it.
Exploring the game beyond the game
From matchday pies to payroll, ticketing to training schedules, football clubs are businesses too.
And so much of what makes football great is powered by everyday people doing great work behind the scenes, often without the spotlight.
“Matchdays aren’t just about football—they keep local shops and communities alive.”
Gary Neville
It’s something Gary saw from a young age.
“Growing up and watching Bury with my mum and dad… the local sweet shop, the fish and chip shop… all these small businesses that thrive around a match day, that communities rely upon to keep them going.”
He also sees how the game—and the business world—are rapidly changing.
“Football’s caught up fast. Now, every club is using data and systems to get ahead. If you resist technology, you risk being left behind.”
The badge might be worn on the pitch, but it’s backed by the businesses off it.
With nearly half of all EFL clubs already using Sage, it’s proud to power the people behind the pros.
Sage helps small and medium businesses, like football clubs or local matchday meeting points, manage the numbers, admin, and time-consuming jobs that keep things running smoothly—from payroll and invoicing to accounting and forecasting.
This includes thousands of local shops, cafés, accountants, and entrepreneurs—the same people powering football from the grassroots up.
So, when you look at the EFL—72 clubs, millions of fans—it’s more than sport. It’s about the communities and businesses that have supported clubs for generations.
The same kinds of people Sage has championed for over 40 years.
“Football clubs and small businesses are embedded together. That’s why the Sage and EFL partnership makes sense.”
Gary Neville
Game on
With more than 43 years of local business experience, Sage knows this is just the beginning of the journey with the EFL—and we can’t wait to share more stories of the people who power the game.
Shout out a brilliant local business and win with Sage
We’re giving away EFL club sponsorship packages* to celebrate the power of local business.
Know a fantastic local business? Nominate them today.
After you nominate, you’ll enter a draw where you could win a VIP matchday experience at your local EFL club.
Hospitality, atmosphere, unforgettable memories—all on Sage.
Find out more
*Sponsorship prize subject to club agreement & advertising availability. UK residents 18+. Some business exclusions apply, see T&Cs for further details. Max 1 entry per person. Promoter: Sage (UK) Limited.
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Accounting has always been built on trust, precision, and sound judgment. But the way accountants must deliver value is changing – fast.
At Sage Future 2025, Sage CTO Aaron Harris revealed a powerful shift in thinking: the future of AI in finance won’t be about faster answers. It’ll be about encouraging smarter, more autonomous action.
That’s the promise of agentic AI: intelligent systems that don’t just respond to your prompts, but monitor, interpret, and act independently across your many tasks and workflows.
Here’s what we discuss in this article:
What agentic AI means for accountants
In the first article of this series, we unpacked this agentic AI shift for finance professionals. For accountants, it means moving from a reactive service to real-time, anticipatory insight.
Whether you support sole traders or have scaled to serve mid-sized businesses, this new class of AI could transform how your practice operates, how clients engage, and how you grow.
Agentic AI doesn’t just wait for prompts – it acts on behalf of the user. That changes everything.
Aaron Harris, Chief Technology Officer, Sage
As an accountant, you are already familiar with automation – tools that speed up tasks – or generative AI, which can write, calculate, or summarise on request.
But agentic AI is different. It’s always running in the background, learning, monitoring, and – crucially – taking initiative. Like an expert PA that pre-empts tasks before you’ve assigned them, it will change the speed and quality of your day-to-day routine.
Think of it like this:
Automation completes a task when you ask it to.
Generative AI creates something when prompted.
Agentic AI notices something’s off and starts solving it before you even ask.
In a practice setting, that could support you to:
Monitor client books and behaviours in real time.
Spot anomalies or errors as soon as they appear.
Flag compliance risks or gaps in documentation.
Suggest or initiate next-best actions – like reconciliation or client follow-ups.
Agentic AI is where you have a digital practice assistant that never sleeps, never forgets, and never needs chasing.
Let’s say a client misses their quarterly VAT deadline. Instead of relying on reminders or your team spotting it manually, your AI assistant could:
Detect the missed deadline.
Flag the account.
Draft a personalised follow-up email – automatically.
Multiply that across your entire client base, and you begin to see the value: scale, consistency, and speed.
From reactive to proactive: A mindset shift
Traditionally, accountants have worked in hindsight – reviewing past transactions, fixing issues after they occur, and responding to client questions after the fact.
Agentic AI changes that.
Prepare for intelligent systems that surface problems early, initiate workflows before deadlines are missed, and alert you without being prompted. The result? Less firefighting, more foresight.
This flips the accountant–client relationship from reactive to predictive. You’re not just explaining what happened – you’re helping clients navigate what’s coming.
Brady Lewis, Senior Director of AI Innovation at Marketri
Instead of scrambling through the month-end close, you can deploy agentic AI that pulls in data from banking feeds, sales platforms, and payroll systems, automatically reconciling totals, applying journal entries, and highlighting exceptions before anyone logs in.
You can use an AI agent to ping clients for missing invoices, start drafting emails, and maintain consistency in reminders, all without human input.
Perhaps most importantly, agentic systems provide continuous oversight.
Agentic AI monitors transactions 24/7, flags anomalies against historical norms, and even recommends changes – like adjusting a tax strategy or updating compliance workflows – based on patterns and preferences.
This isn’t just about saving time. You’ll shift your practice from response to prevention.
Try it yourself: A glimpse into agentic AI in action
Agentic AI is beginning to emerge in tools like Microsoft, Chat GPT, and Sage Copilot, making it possible to build and interact with autonomous workflows.
Microsoft Copilot and ChatGPTnow let you build specialist agents with tools, memory, and predefined goals.
Sage Copilot is evolving toward the agentic model, building ways to automate workflows, surface alerts, and trigger actions without you needing to prompt the software manually.
To understand the difference a tailored tool can make, try this prompt in ChatGPT or Microsoft Copilot to see how the LLM responds. Then compare it to how agentic AI would handle the same input – proactively, without being asked.
Prompt:
You are an AI assistant for a small business accountant. The client has just closed June and uploaded their ledger. Review the data, flag any issues, and recommend next steps.
Then, offer to draft a follow-up email or automate part of the workflow. Here’s a simplified ledger view you can enter:
Description
Amount
Notes
Rent
£2,000
Salaries
£8,500
Software Subscriptions
£900
Client Payment (overdue)
£3,000
Payment late
Software Subscriptions
£900
Duplicate entry
VAT Payment
£1,200
Here’s the difference between what generative AI and agentic AI would do:
Task
Generative AI
Agentic AI
Duplicate entry spotted
✅ (if prompted)
✅ (proactive)
Overdue invoice flagged
✅ (if prompted)
✅ (proactive)
Reconciliation suggested
✅ (if prompted)
✅ (initiates task)
Follow-up email drafted
✅ (if prompted)
✅ (initiates draft)
Ledger monitored in real time
❌
✅
Workflow triggered automatically
❌
✅
Follow-up email initiated
❌
✅
This comparison highlights a simple truth: agentic AI changes the relationship between you and your accounting software.
Where traditional AI needs a prompt, agentic AI is already working. It’s monitoring your ledgers, surfacing issues, and nudging next actions before you even log in.
That’s a major shift – from tools you control, to systems that collaborate with you.
It doesn’t just save time. It changes the nature of the work:
Less admin. More insight.
Fewer missed deadlines. More proactive care.
Less chasing. More leading.
When your software starts handling tasks proactively – flagging errors, nudging clients, tracking workflows – you’re free to focus on what matters: advising, building trust, and growing your practice.
Agentic AI isn’t just more efficient. It’s more accountant-shaped.
A look ahead: How to automate MTD proposals with agentic AI
Agentic AI is emerging just as accountants face the next phase of Making Tax Digital for Income Tax – bringing quarterly updates and tighter compliance checks. The timing couldn’t be better.
Rather than manually managing every step, agentic systems could soon:
Monitor client submissions.
Flag missing or late data.
Recommend tailored advice or services.
Reduce admin across dozens – or hundreds – of clients.
One potential high-impact use case? Automating MTD service proposals.
Traditionally a time-consuming task, it’s easy to imagine an AI assistant handling the process end-to-end – so accountants can focus on value-added advice.
Here’s what that workflow might look like:
Lead creation: A prospect contacts the firm. Agentic AI builds a draft lead profile using size, location, and needs.
Smart qualification: The AI asks key questions, checks MTD eligibility, and prepares structured records.
Proposal generation: A tailored MTD service proposal is auto-drafted and ready for review if eligible.
In-portal Q&A: Clients ask follow-up questions directly – tracked and stored for compliance.
Insights and optimisation: Agentic AI monitors the funnel, tracking conversion rates and drop-offs.
The building blocks are already here: context-aware, goal-driven AI capable of acting without prompts.
Soon, it won’t just support the proposal process – it could run it.
Moving from busy work to better work with agentic AI
Today’s accountants face pressure from every direction:
Clients want more value – without higher fees.
Governments are tightening digital compliance.
Admin tasks still swallow hours that could be spent advising.
Agentic AI offers a way forward – not by replacing accountants, but by freeing them.
Sage Copilot is going to allow us more time to go out and see our clients, listen to their needs, and be more people-facing rather than behind the computer.
Hannah Hall, Cloud accountant, Walter Dawson & Son
This shift is already happening. Sage software tools can create space for deeper, more meaningful client conversations – not just faster data entry.
The time saving from Sage and AutoEntry is used back with the clients. It allows us to reflect on the information… and talk to our clients more about how they’re performing.
Julie Young, Managing director, Walter Dawson & Son
In a world of agentic systems, the goal isn’t simply automation – it’s better use of human time and expertise.
AI agents evolve roles, not replace them… freeing people to focus on strategy, not repetition.
Kevin Quirk, Director, AI Bridge Solutions
Agentic AI supports firms in three critical ways:
Anticipation, not reaction: spot risks, gaps, and opportunities before they escalate.
Automation with context: let systems act with intent, not just speed.
Capacity without burnout: scale your service without sacrificing quality.
This isn’t just good for practices. It’s better for clients, too.
These moments – advice, empathy, forward-thinking – are where accountants create real value. Agentic AI doesn’t take that away. It helps you make more space for it.
The shift is clear: agentic AI frees up time, surfaces insights, and takes care of the repetitive and the real-time – so accountants can focus on what matters most.
As Marcus Denning, a senior compliance lawyer at MK Law, puts it: “The accountant is no longer an operator – they’re becoming an overseer. Clients won’t expect raw data processing, but interpretation, scenario planning, and advice triggered by the actions of the AI.”
In this new model, accountants are empowered to lead – not only respond. Clients will come to expect more than reporting – they’ll want foresight, clarity, and partnership.
A glimpse into a mid-sized customer future
Mid-sized businesses are under pressure, with complex data, tighter margins, and rising stakeholder expectations. The old model of monthly closes and backward-looking reports can’t keep up.
Agentic AI opens a new path – for finance teams and the accountants who support them.
Imagine offering clients the following:
Daily reconciliation instead of monthly cleanups.
Live cash flow forecasts that adapt to every new invoice or spend.
Real-time revenue alerts based on contract activity.
With agentic systems you’ll find:
Risks are flagged early.
Forecast health is monitored passively.
Recommendations are triggered automatically – from budget shifts to scenario modelling.
For accountants, it’s a shift from reporting partner to real-time advisor.
“We taught models to find anomalies in reports on expenses and income. What used to require hours of examining spreadsheets is now immediately brought to our attention,” said Mihaela Ceornoava, Chief accountant, Omniconvert.
AI-driven tools can:
Spot errors before they hit the client.
Cut reconciliation time from days to minutes.
Surface insights using natural language.
Apply internal accounting policies to act like an internal advisor.
“AI doesn’t just speed things up. It changes how decisions are made. Accountants are evolving into AI supervisors,” said Berkay Kinaci, COO at Speaktor.
This is more than efficiency. It’s a new mindset – where accountants lead with insight, not hindsight.
As Sage CEO Steve Hare recently wrote, “We didn’t start with hype. We started with solving your challenges.”
That philosophy drives how Sage is building agentic AI – not as a flashy bolt-on, but as authentic intelligence, built with accountants, for accountants. It has created AI that acts purposefully, earns your trust, and helps you lead beyond your daily routine.
Agentic AI can only be useful if it’s safe, explainable, and built with accountants in mind. That’s why Sage has trained its own AI models to ensure its expertise in financial services – not just use bolt-on general-purpose tools.
These models are:
Trained on accounting standards and Sage product data.
Designed with auditability and compliance at the core.
Embedded directly into Sage tools like Sage for Accountants, Sage Copilot, and Sage Intacct.
Sage Copilot is going to pick out anomalies within VAT returns… I have some clients that process their own VAT returns and just want us to look over it – Copilot will help us do that.
Hannah Hall
And with the new AI Trust Label, accountants can see exactly how a model was trained, what data it uses, and how accuracy and bias are managed.
Trust is the biggest barrier to adopting AI… We’re not just building artificial intelligence – we’re building authentic intelligence.
Aaron Harris
Final thoughts: Questions every accountant should ask
Agentic AI is a practical toolset, grounded in real-world use and working inside products you know.
So, as you look ahead, ask yourself:
Are we still waiting for insight – or is insight finding us?
Are we spending time on judgment – or just data entry?
Are we building a firm that reacts – or one that leads?
The next generation of accounting won’t just rely on dashboards.
It’ll run on agents – trusted, intelligent, and built to act.
Sage Copilot. Your dedicated AI-powered productivity assistant
Step into a new business era with Sage Copilot, built on over 40 years of experience supporting British businesses like yours. Get work done faster with real insights, fewer errors and less admin.
HR teams face many challenges in our modern world.
Lifelong learning, development, and wellbeing are notable examples that have a significant impact.
For example, reskilling of employees ranked as the second biggest pain point in the IDC HR Leaders’ Road Map for 2025.
Add-in compulsory learning and development (L&D) for compliance and the tip of a large iceberg comes into view. Ensuring adherence to regulations can’t be sidelined.
In this article, we look at how to identify the core L&D issues your organisation may be facing—and what you can do to solve them.
Here’s what we cover:
Why Learning & Development struggles to win today
According to the Digital Learning Realities 2024 research report from HR industry analysts Fosway Group, 74% of L&D teams say building skills is becoming a high priority to the future success of the organisation.
Drilling down into this ambition, many professionals suggest employee-led learning is a way forward. Indeed, according to Gartner’s Leadership Vision for 2025, 61% of L&D leaders agree this is critical to success.
Unfortunately, this determination isn’t reflected in reality.
The LinkedIn Workplace Learning Report 2024, for example, highlights struggles around measuring return on investment (ROI) that may sound familiar: only 16% of L&D professionals measure specific business improvements that are tied to learning for new skills (per learner).
Elsewhere, research from the Society for Human Resource Management (SHRM) suggests 25% of training materials are forgotten immediately by employees.
SHRM’s research adds that, from an organisational perspective, 35% of HR managers struggle to find the right training content to fit their needs, while 32% report difficulty in keeping content that’s up to date amid always-on workplace transformations.
This highlights a key issue facing HR teams and L&D: the pace of change continues to accelerate, requiring every working person to continuously improve their skills and meet compliance goals.
But catering to this can seem like pie in the sky if teams are struggling with even the basics.
Is your L&D team truly capable of being a strategic partner while being held back by legacy technology deployments?
Meeting Learning & Development challenges head-on
What challenges exist and where do they originate?
Low engagement: Legacy top-tier learning management systems (LMS) or Learning Experience Platforms (LXP) are flooded with outdated content, difficult to navigate, and can be so complex and cumbersome that it takes employees minutes just to even start a course.
Return on investment for training expenditure: L&D managers face challenges when trying to measure the ROI of their training spend, such as poor data availability, and having multiple learning technology solutions and delivery methods. As such, it can be difficult if not impossible to ensure alignment with business goals.
Multiple and disparate solutions: Research has shown that the average number of solutions businesses have for learning, career development and wellbeing is just over 16, with half of organisations using multiple platforms to deliver training. Not only is managing and maintaining disparate solutions effectively creating extra work, there’s also no unified view of data.
Compliance knowledge: L&D teams need to constantly produce and maintain several types of compliance training to ensure employees understand and adhere to relevant laws, regulations, and company policies. Yet some employees perceive the content as boring, irrelevant, and filled with jargon, leading to low engagement. Finding or creating content in a timely manner is also a challenge for L&D teams.
How microlearning is solving the L&D challenge
Microlearning is transforming the way L&D teams deliver training, offering a flexible and engaging alternative to traditional, long-form programmes.
Instead of requiring employees to block out hours for classroom sessions or lengthy e-learning modules, microlearning breaks content into short, focused lessons—often just five to 10 minutes each—that can be accessed on demand.
Information is also better retained by learners in this format.
Add in a mobile-first approach, which ensures the bite-sized content is available 24/7 for the employee—whether on a mobile phone during a commute or in between meetings—and this approach directly aligns with how we all consume information today.
It balances better with busy work schedules. Engagement is dramatically improved, as employees can control when and how they learn.
Microlearning also encourages a culture of continuous learning. By delivering bite-sized lessons consistently, L&D teams can reinforce a growth mindset and help employees build resilience in a fast-changing workplace. Staff can adapt quickly, stay current with new skills, and view learning as an ongoing journey rather than a one-time event—strengthening both individual capabilities and organisational agility.
Furthermore, with the ease of creating such short snippets, it’s easier to create bespoke training that helps bring your brand to life. You can celebrate a diverse culture and connect remote employees to your company purpose and brand.
What to consider when choosing the right L&D platform
With the above in mind, we can start to construct what an ideal L&D platform looks like:
Microlearning: Examples of your content could include quick five-minute lessons and tips that help employees gain valuable insights from books, documentaries, and courses. As a result, speed-to-skill performance can be increased.
Translation and localisation: If your organisation works across borders, look to ensure seamless global scalability is built-in, to help localise your resources. With the use of AI, translations can be instant and of a high quality.
All-in-one solution: Cut costs by dropping multiple vendors and streamlining the L&D tech stack. Replace your complex array of tools—from LMS and Employee Assistance Programmes (EAP) to learning content and training providers. Look to ensure your L&D microlearning is just one component of a powerful, broad people-management solution. This not only helps maximise ROI because there’s no need to pay for costly disparate licenses, it also enables the easy generation and collection of metrics.
AI analytics and reporting: AI is changing everything, and in the world of people management, it’s providing extraordinary insights into measures such as learner progress, compliance completions, and engagement levels—not to mention other employee measures.
Final thoughts
The path forward for L&D isn’t more complexity. It’s to be smarter and to simplify. This is also a route to better ROI and per-employee cost savings.
Microlearning is a modern and effective route forward and when implemented as part of a broader, all-in-one people management solution, it can bring meaningful change.
Next steps? Audit your current learning tools, identify content that can be repurposed into micro modules, and explore platforms that unify training, analytics, and wellbeing support.
By starting small and scaling quickly, you’ll lay the foundation for a culture of continuous growth and long-term workforce resilience.
Sage People: an all-in-one HR and payroll solution
Sage People is a global cloud system that features Uptime, a mobile-first, micro-learning content platform, alongside AI-powered HR and people analytics, payroll, people management, attendance and leave management, and talent acquisition.
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Making Tax Digital (MTD) is the government’s ongoing plan to bring tax accounting and collection into the 21st century.
As the name suggests, it does this by legally requiring the use of software. As such, it also requires key accounting records relating to tax are kept digitally, and that these are communicated regularly to HMRC.
In return, it’s possible to see throughout the year how much tax you owe before payment becomes due at the usual times. This aids better cash flow calculations, among other things.
And the use of accounting software can be revolutionary, reducing or even removing much of the drudgework of administration. This frees up people to do more of what they love within their business.
In this article, we take a look at Making Tax Digital (MTD) for Income Tax and try to answer some questions by way of an introduction for the general reader. Don’t worry, this isn’t a technical deep dive!
We start with a brief overview of MTD before diving into some questions and answers to help you navigate what MTD for Income Tax will mean for your business.
It should be noted that we already have blogs that look in-depth at certain kinds of business impacted by MTD for Income Tax:
A guide to Making Tax Digital for Income Tax
Need help to get your business ready for Making Tax Digital? Download this free guide to learn about MTD for Income Tax and get prepared now.
Download your free guide
Background on Making Tax Digital
The first wave of Making Tax Digital became law in 2019 when MTD for VAT was introduced. This was expanded out to more businesses in 2022.
But it’s four years later – in April 2026 – when arguably one of biggest changes is set to arrive.
MTD for Income Tax will affect millions of sole traders and landlords, with those with qualifying income over £50,000 falling within scope from 2026, those with qualifying income over £30,000 from 2027, and those with qualifying income over £20,000 from 2028.
Qualifying income is simply your gross income from self-employment and/or property (before expenses, in both cases). It is not your net income.
MTD has been called the biggest shake up in tax for a generation. But even this might be too conservative an estimate of the impact it will have for millions of people.
You owe it to yourself to get ready sooner, rather than later.
To be clear, Making Tax Digital for Income Tax is known by several titles, but they all refer to the same thing:
Making Tax Digital for Income Tax Self Assessment, or MTD for ITSA
MTD for Income Tax, MTD for IT, or MTD IT.
You might also hear it referred to as ‘phase 2’ of MTD, but care should be taken because this means different things to different people.
1. What is Making Tax Digital for Income Tax in a nutshell?
Here is MTD for Income Tax summarised in as few words as possible:
MTD for Income Tax’s requirements replace the need for a Self Assessment return, and affects sole traders and landlords who currently use the Self Assessment income tax system.
In the first phase, it will only affect those listed above with qualifying income over £50,000. In the second phase, it will affect those with qualifying income over £30,000, and in the third phase those with a total qualifying income over £20,000.
For each sole trader business, and for total rental income, it requires at least updates every three months to be submitted to HMRC.
Each individual must also submit a tax return by 31 January following the end of the tax year in the previous April, using their accounting software.
We look into all of this in more depth below.
2. Who does MTD for Income Tax affect?
MTD for Income Tax will affect any of the following individuals who currently use the Self Assessment system and whose qualifying income is higher than the threshold:
Sole traders.
Landlords receiving rental income (including furnished holiday lettings, and foreign property).
The thresholds will apply to the income of an individual, rather than to individual businesses.
For example, if an individual is both a sole trader and also a landlord receiving rental income, then the income from these two businesses is added together to determine if that person crosses the threshold.
Similarly, if an individual owns several sole trader businesses then the income from each should be added up to see if that person crosses the threshold.
If the individual does not cross the threshold then they should continue using submitting a Self Assessment tax return, as currently is the case. Anybody just starting out as a sole trader or landlord will use the Self Assessment system until such time as HMRC tells them otherwise (e.g. when their income for a tax year crosses the threshold), or if they choose to voluntarily sign-up for MTD for Income Tax.
3. What are MTD for Income Tax quarterly updates?
Quarterly updates are a regular requirement of MTD for Income Tax. They help you better understand your tax and National Insurance liability across the year.
The rules are simple. At a minimum every three months across the tax year, and for any business you own, you’re required to submit updates about your business income and expenses to HMRC, using software.
Landlords need to submit these updates for their rental income but only one is required, regardless of how many properties are owned and from which rent is collected.
It has to be emphasised that four updates each accounting period is a minimum. You can submit more if you think it will assist your accounting.
A business that earns more than £50,000 would need to submit at least the following updates for the 2026/27 tax year:
1st: Due by 7 August 2026 (covers 6 April 2026 – 5 July 2026)
2nd: Due by 7 November 2026 (covers 6 July 2026 – 5 October 2026)
3rd: Due by 7 February 2027 (covers 6 October 2026 – 5 January 2027)
4th: Due by 7 May 2027 (covers 6 January 2027 – 5 April 2027)
Some businesses can also use calendar update periods if their basis period ends 31 March, rather than 5 Aptil. In other words, the first quarterly update for such a business would still be due by 7 August but would cover the period 1 April – 30 June.
The updates will contain information about your accounting such as your income and allowable expenses.
There’s no legal requirement for the updates to be accurate. Nor will you ever need to go back and correct anything that was wrong in an earlier quarterly update.
However, accurate updates will mean HMRC is able to best estimate your tax and National Insurance liability, so you can be sure about cash flow and the amount of money that you’re putting away to pay your eventual tax bill.
These updates might sound foreboding but good accounting software will automate much of it. It’s likely all you will have to do is review the information before tapping or clicking to submit it. If you have an accountant or bookkeeper, they can do this for you.
Updates need to be submitted in this way for each business you own, and for any property income. This could mean submitting several updates each quarter.
4. What are MTD for Income Tax end of period statements (EOPS)?
If you’ve been following MTD for Income Tax for over the years since its inception, you may have heard of End of Period Statements, or EOPS.
These are no longer a part of MTD for Income Tax.
HMRC now only requires quarterly updates and the digital tax return in terms of submissions.
Similarly, the term Final Declaration was once used to refer to the digital tax return HMRC requires as part of MTD for Income Tax. The term is no longer used but you might still hear some people referring to it.
5. What is the MTD for Income Tax digital tax return?
By no later than 31 January following the end of the tax year (5 April), you need to sign a digital tax return, in a similar way to you might currently with Self Assessment. However, this is done within the MTD-compatible software.
This replaces the Self Assessment tax return, along with anything else you may have heard about, such as a Final Declaration or end of period statements (EOPS).
It means bringing together all the data including business and non-business income needed to finalise your tax position and reach your final tax liability. You (or your accountant) should also include any applicable reliefs and adjustments.
As with Self Assessment, HMRC will then tell you via the MTD software how much tax and National Insurance you’re liable for. You then digitally sign this (notably, your accountant or bookkeeper cannot sign it on your behalf).
The tax return applies to you as an individual, so you only need to submit one, regardless of whether your income comes from multiple sole trader businesses and/or property rental. Its deadline is fixed each year on 31 January.
6. Can my accountant or bookkeeper create quarterly updates and the tax return for me as part of Making Tax Digital?
They can prepare and submit both, and also submit the quarterly updates on your behalf. But as with the current Self Assessment system, you will need to review and digitally sign the tax return within the MTD-compatible software.
Your accountant or bookkeeper can also sign you up to MTD, if you wish, rather than you doing so yourself. Discuss this with them ahead of time.
You will need to ensure your accounting software is digitally linked to that of your accountant and/or bookkeeper. and let HMRC know when you sign up that your accountant will act on your behalf.
Speak to your accountant ahead of time to ensure this is the case.
Note that it’s possible to have both a bookkeeper and a separate accountant digitally linked to your MTD account and software in this way.
7. When do I pay my tax and National Insurance contributions under MTD for Income Tax?
You should pay any outstanding tax liability by 31 January following the end of the tax year on 5 April. You will know the amount due because of your tax return.
If you pay on account then a further payment will then be due by 31 July, just like with Self Assessment.
8. How do I sign up for MTD for Income Tax?
Right now this isn’t possible outside of the MTD for Income Tax beta programme (see ‘What’s the MTD for Income Tax beta programme?’ below).
HMRC is contacting people to tell them if they need to follow the MTD for Income Tax rules as of April 2026, based on their most recent tax return.
Following this, you must sign up via the HMRC website. You must ensure you have MTD-compatible software in place and sign-in to your MTD for Income Tax account within the software. Speak to your software vendor if you have any questions.
Your accountant or bookkeeper might be able to sign you up to MTD for Income Tax, if you wish to avoid the task yourself. Speak to them ahead of time about this.
9. Is Self Assessment ending because of MTD for Income Tax?
No. For those who are required to use MTD for Income Tax, the digital tax return replaces the need to file a Self Assessment return.
However, for everybody else required to file a Self Assessment return and who are outside the scope of MTD for Income Tax, there will be no change. Self Assessment will continue to be used. Examples might include company directors or those needing to declare pension income.
Furthermore, those new to being a sole trader and/or renting out property will not go straight to MTD for Income Tax, even if they’re sure their income will be above the threshold. Instead, they will sign-up for Self Assessment and then switch to MTD for Income Tax as and when HMRC notifies them in writing. Alternatively, they could voluntarily sign-up to MTD for Income Tax after signing-up to Self Assessment, but this will mean they will still need to complete a year of Self Assessment.
10. What’s the MTD for Income Tax beta programme?
HMRC is running an optional beta programme that you can sign up to in order to take part in MTD for Income Tax between now and its mandation in April 2026.
There are some limitations on who can join.
You need to be up to date with your taxes, for example, with no outstanding liabilities. Those who claim Married Couple’s Allowance or Blind Person’s Allowance cannot sign-up, and nor can those who are bankrupt or insolvent (or know they will be soon).
Those who use averaging calculations for their income, such as seasonal businesses like farmers, also can’t sign-up to the beta.
You’ll need software compatible with MTD for Income Tax, of course, such as Sage Accounting. This has plans for all kinds and sizes of sole traders and landlords, including Sage Accounting Individual Free.
11. Is MTD for Income Tax delayed?
MTD for Income Tax was intended to be among the first of the Making Tax Digital schemes, back in 2015.
Obviously, that did not happen. Brexit, the pandemic, consultations with stakeholders by HMRC, and other factors, all contributed to Making Tax Digital being fundamentally rescoped by the government.
Even after its official launch, the scheme was delayed twice, most recently following an announcement from the government in December 2022.
However, it’s very unlikely at this point there will be any further delays given that the launch date of April 2026 is so close.
12. Is there free software for MTD for Income Tax?
Yes. A good example is Sage Accounting Individual Free, which lets you simplify your finances with free accounting software that makes bookkeeping, transaction tracking, and both MTD for Income Tax and Self Assessment easy.
There are other Sage Accounting plans for other types and sizes of business.
The government considers the purchase of compatible MTD accounting software to be a legitimate business expense that businesses are expected to pay.
13. Can I use spreadsheets for MTD for Income Tax?
The use of spreadsheets is allowed for sole traders and landlords that fall within the scope of MTD for Income Tax.
However, there are complicated guidelines around the cutting/copying and pasting of the tax records, which falls under the digital linking rules. In short, while spreadsheets can be used for MTD, care must be taken.
You’ll will be breaking the law if you copy and paste certain values from a spreadsheet into your accounting software to complete a quarterly update, for example. Instead, the link between the spreadsheet and the accounting software must be both digital and automated, according to the digital linking rules.
Spreadsheets have inherent limitations, such as poor data security measures, and the ease at which a simple mistyping can accidentally erase a critical formula. You must maintain your digital records for five years as part of the income tax rules.
Can you be sure that you’ll be able to do this if you’re using spreadsheets?
Those using a spreadsheet for MTD for VAT require bridging software to file their returns with HMRC. This is available from software vendors. The same kind of software is likely to be available for MTD for Income Tax, and will probably link into a broader cloud-enabled service.
However, most experts agree that it’s simpler easier and more effective to use cloud accounting software.
14. What’s the MTD for Income Tax threshold?
The first phase of MTD for Income Tax will apply only to self-employed businesses’ income and/or property income of more than £50,000.
The second phase will apply to those earning over £30,000. The third phase applies to those earning over £20,000.
Here’s how to determine when you might need to use MTD for Income Tax:
As of April 2026: If you have qualifying income over £50,000 in the 2024/25 tax year and subsequent tax years.
As of April 2027: If you have qualifying income over £30,000 in the 2025/26 tax year and subsequent tax years.
As of April 2028: If you have qualifying income over £20,000 in the 2026 /27 tax year and subsequent tax years.
15. How long do I have to keep my old accounting records as part of MTD for Income Tax?
This doesn’t change compared to the existing Self Assessment system. You should keep records for at least five years. The difference with MTD is that these must be kept digitally. You cannot print out your accounting records and stash them in a filing cabinet, for example.
16. Where can I learn more about MTD for Income Tax?
HMRC is running webinars about MTD for Income Tax. The MTD for Income Tax beta government pages also provides some information about how the scheme will work.
The government’s overview of Making Tax Digital contains higher-level information about its plans.
We’ll share more details on Sage Advice whenever any new information becomes available, including guidance on how to comply.
Final thoughts on MTD for Income Tax
Key to getting ready for MTD for Income Tax is to stay ahead of the curve when it comes to learning about it, and also adoption.
Aim to sign up as soon as you can. This way you’ll be ahead of the millions of others doing the same thing, and who are likely to cause substantial congestion when it comes to receiving support from HMRC and also their software vendor.
If you need to switch to using accounting software to comply with MTD for Income Tax then this is also best done as soon as possible, so you can adapt and improve any of your admin processes ahead of the legal requirements of MTD for Income Tax coming into force.
Cloud accounting software will be updated in time, and you can start using it today.
MTD for Income Tax might seem like a big change but by splitting out the required tasks into chunks, you can introduce the requirements gradually for the benefit of you—and your business.
Editor’s note: This article was first published in September 2021 and has been updated several times for relevance.
A guide to Making Tax Digital for Income Tax
Need help to get your business ready for Making Tax Digital? Download this free guide to learn about MTD for Income Tax and get prepared now.
Changing from day-shift to night-shift is notoriously hard on employees, but even planning shift structures can be quite a headache.
Some shift patterns require multiple teams, with potential for confusion if you draw on one team to cover for an absence in another.
You can feel like your head is in three different places!
However, today we’ll demystify shift planning, looking at the different patterns commonly used and how the right set-up can actually improve motivation and wellbeing.
This guide will also provide practical steps for implementing a new system, one that works for your business while also supporting your team.
Here’s what we’ll cover:
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What is a shift pattern?
A shift pattern is a structured schedule that tells your employees when they need to work and when they need to transfer duties to a different team.
Instead of a standard 9-to-5 schedule, it organises your team (or teams) into different blocks of time.
This approach is essential for any business that operates outside of typical office hours.
You’ll find them in retail shops that open late, restaurants with dinner services, and hospitals that need 24-hour care.
Why do businesses use shift patterns?
The main purpose of a shift pattern is to give your business continuous operational coverage.
You arrange shifts to ensure there’s always a team member available during business hours, on weekends, or at night.
This helps you to:
Balance staffing costs by creating a clear schedule, which avoids unnecessary overtime. You can also match your staffing levels to peak customer demand.
Improve employee morale by giving your team predictability. A well-designed shift pattern allows staff to plan their lives outside of work, which can improve their job satisfaction and loyalty.
Maintain compliance, becauseyou can easily track working hours and breaks. You can quickly make sure you are following UK labour laws, like the Working Time Regulations.
For new business owners, moving from a simple schedule to a more complex shift pattern can be a game-changer.
It helps you professionalise your operations, manage your payroll more effectively, and ensure you’re always ready to serve your clients.
Key types of shift patterns
Technically, the traditional 9 to 5 work schedule is a shift pattern, but we never call it a shift because in most cases it’s the same every day—a fixed shift.
The night shift is different—most of us assume it’s a temporary arrangement, complementing a day-shift component.
And sometimes working hours have to accommodate external circumstances. This could lead to irregular shifts, otherwise known as flexible shifts.
However, even fixed shifts can vary in the patterns they follow.
Different businesses have different operational needs, and choosing the right shift pattern can mean the difference between smooth sailing and an uphill struggle.
Here are some of the most common shift structures and how they support different team needs.
Two-shift pattern
A two-shift pattern divides the workday into two distinct blocks. The most common arrangement is an early shift and a late shift.
For example, one team might work from 6 a.m. to 2 p.m., while the second team takes over from 2 p.m. to 10 p.m.
This pattern is ideal for businesses that need to extend their operating hours beyond a standard 8-hour workday but don’t require 24/7 coverage.
This schedule is often used in manufacturing, retail, and some logistics operations. It’s great because it provides a predictable routine for employees.
A common practice is for teams to rotate between the two shifts weekly.
For example, a team member might work the early shift one week and then switch to the late shift the following week.
This rotation helps ensure that all employees share the benefits and drawbacks of each shift time fairly, who often.
The biggest advantage of the two-shift model is that it can extend your production or sales window without the complexity of a 24-hour cycle.
The main downside is that it doesn’t provide weekend or overnight coverage, which might limit your potential for growth.
Four-on-four-off
Also known as the DuPont schedule, the four-on-four-off pattern is a very popular choice for operations that need constant coverage.
Each 24-hour cycle is divided into two 12-hour shifts, requiring two teams.
However, each team only works four consecutive shifts, followed by four days off.
This means the employer needs another two teams to cover those four days. So, four teams in all.
The teams can alternate, as explained for the two-shift model. So a team could work four day shifts, have four days off, and then work four night shifts.
Industries like emergency services, data centres, and security often use this pattern.
Its primary advantage is the generous rest period of four days, which employees love.
It also provides 24/7 coverage with fewer teams than the traditional model of three 8-hour shifts each day.
That model requires five teams so that each team gets the requisite monthly time off.
A potential disadvantage of the four-on-four-off pattern is the long 12-hour shifts, which can lead to fatigue.
A real-world example is a hospital’s A&E department, which uses this structure to ensure there’s always a full team of nurses and doctors available.
Continental
The Continental shift pattern gets its name from a scheduling system often used in mainland Europe.
It’s a fast-rotating schedule that provides 24/7 coverage using three 8-hour shifts.
The rotation typically follows a sequence like this: each team works two mornings, two afternoons, then two nights, followed by four days off.
This pattern ensures a fair distribution of morning, afternoon, and night shifts among all teams.
This pattern is widely used in manufacturing, utilities, and public transport.
It’s popular because the 8-hour shifts are less strenuous than 12-hour shifts, which can help reduce burnout.
The rotation is also very predictable, allowing employees to plan their personal lives.
However, having only 24 hours to adapt to each shift change can sometimes be challenging for employees’ sleep cycles.
Panama
The Panama shift pattern is a slow-rotating schedule that provides 24/7 coverage using four teams on 12-hour shifts.
It’s often called the “2-2-3” schedule because each 14-day cycle follows this pattern:
two days on, two days off, three days on
two days off, two days on, three days off
In other words, teams are always alternating between days on and days off, but according to this 2-2-3 sequence.
Again, a team may switch between the day shift for one 14-day cycle and nights for the following two weeks.
This schedule is frequently used in security firms, paramedic services, and critical infrastructure operations like power plants.
Its main benefit is the built-in weekend coverage, as employees get a three-day weekend every other week.
This is a huge bonus for work-life balance.
The slower rotation can be problematic for those who stick to the same shift (days or nights) cycle after cycle, because this can disrupt natural circadian rhythms.
Rotating shifts
Rotating shifts are a broad category where employees cycle through different shift times over a set period.
It’s an approach that can apply to a number of patterns we’ve discussed.
For example, the Two-shift, Continental and Panama patterns are all technically types of rotating shifts, but they are more specific in how and when they rotate.
Unlike fixed, regular schedules, a worker might be on morning shifts one week, afternoon the next, and nights the week after.
The rotation period can be weekly, bi-weekly, or monthly.
This is common in hospitals, call centres, and manufacturing plants.
The primary advantage is that it ensures all employees experience the benefits and drawbacks of each shift time equally.
It also provides the kind of flexibility needed for effective workforce management, so you can adapt to changing staffing needs.
A major downside is the disruption to employees’ personal and social lives, as their schedules are constantly changing.
Weekend or night shifts
This pattern involves having dedicated teams that only work on weekends or at night.
Instead of rotating everyone through these unpopular hours, you create specific roles for them.
These positions might appeal to people who prefer a non-traditional schedule or are looking for extra pay.
In that sense offering a fixed weekend or night shift can even be a good recruiting tool.
This pattern is very effective in retail, hospitality, and customer service where demand is highest at weekends or outside of standard hours.
The main disadvantage is the challenge of finding staff willing to consistently work these antisocial hours.
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How to choose the right pattern for your company?
Working practicalities are a major factor in deciding which pattern to adopt, but you can’t overlook the human element.
The best choice is one that balances your business needs with the wellbeing of your team.
Here’s a simple checklist to guide your decision:
Operational requirements. How many hours a day, and days a week, do you need to be open? Do you have peak times that need more staff?
Industry standards. What patterns are common in your industry? Looking at what your competitors do can be a good starting point.
Personnel. Some patterns, like the Panama shift, require a minimum number of teams to work effectively.
Legal requirements. In the UK, employers must comply with the Working Time Regulations 1998, which set out rules on maximum weekly working hours, rest breaks, daily and weekly rest periods, and paid annual leave.
Employee preferences. Talk to your team. It’s possible that several members will have similar feedback on what works for them.
It’s wise to start with a trial period.
For example, test a new pattern for a few months and then review its effectiveness.
Feedback from your employees and key metrics, like productivity and overtime costs, will help you refine the schedule.
Pros and cons of different shift rotas
Rather than refer back to our earlier analysis of each method, it may be helpful to compare each one at a glance.
Here’s a breakdown of each pattern.
Shift Pattern
Pros
Cons
Two-shift
Predictable schedule for staff; simple to manage; extends operational hours without 24/7 complexity.
No coverage for nights or weekends—can limit business growth; less ideal for service-based businesses with inconsistent hours.
Four-on-four-off
Employees get long, four-day breaks; very predictable for planning personal time; provides 24/7 coverage with fewer teams.
Long 12-hour shifts can be very demanding and lead to fatigue; can be difficult to find cover for absences; overtime can be costly.
Continental
Shorter 8-hour shifts can reduce burnout; fair distribution of morning, afternoon, and night resonsibilities; provides reliable 24/7 coverage.
Fast rotation can disrupt employee sleep cycles; some rest periods are short; less popular with employees who dislike frequent night shifts.
Panama
Provides a three-day weekend every other week; slow rotation gives a sense of stability; reliable for 24/7 operations and team coverage.
The slow rotation can be challenging for circadian rhythms; can be complex to manage for new schedulers; requires a minimum of four teams.
Rotating shifts
Ensures all employees share less desirable shifts; offers management flexibility to adjust for demand; can be a good entry point to different roles.
Can be very disruptive to an employee’s personal life and social plans; unpredictable schedule can lead to higher turnover; can be challenging for team morale.
Weekend/Night shifts
Appeals to employees who prefer non-traditional hours; provides consistent coverage during peak times; you only offer higher pay to the few recruits who sign up for difficult hours.
Can be difficult to recruit and retain staff for these specific roles; can create a disconnect between day and night teams; may require separate management.
Finding the right balance for your business
In summary, every shift pattern has its trade-offs.
What works for a company in retail might not be a good fit for a hospitality business.
The best pattern supports efficiency while also keeping your team motivated and your customers happy.
Your choice of a rota is a key part of creating a positive and productive work environment.
It’s also important to remember that your business needs may change. A shift pattern that works perfectly now might not be ideal in six months.
Regularly review your schedules to make sure they’re still meeting your operational goals and supporting your team.
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Compliance and legal factors around shift patterns
Settling on the above basics is just the start. You then have to make sure you can implement the chosen pattern in accordance with local laws.
In the UK, several legal factors directly influence how you can schedule shifts.
Ignoring these can lead to fines and legal action, so it’s vital to get them right. Here’s what you need to look out for:
Working time regulations
The law requires that most adult workers can’t work more than 48 hours per week (averaged over each month).
You must also provide minimum rest breaks, including a 20-minute break for shifts over six hours and daily rest of 11 consecutive hours.
Each week must also include a break of 24 consecutive hours (or 48 hours over two weeks).
Health and safety requirements
As an employer, you have a duty of care to your staff.
This means you must assess and mitigate risks, especially for night workers, who are entitled to free health assessments.
Record-keeping obligations
You are legally required to keep accurate records of your employees’ working hours, breaks, and paid holiday.
This can be a huge administrative task if you’re doing it manually, but modern software can automate this for you, making sure your records are always up to date and accessible.
Overtime and compensation rules
When employees work more than their contracted hours, they’re often entitled to overtime pay.
You need to be transparent about how you calculate and pay for this, as well as any enhanced rates for working unsocial hours.
Supporting employee wellbeing
Shift work, especially at night or with irregular hours, can disrupt your employees’ health and personal lives.
Forcing them to follow schedules that lead to ill health not only impairs productivity but can also damage your business’s reputation.
When you focus on the wellbeing and happiness of your shift workers, you’ll see a clear return on your investment.
Healthy and well-rested employees are more productive, reliable, and loyal, leading to tangible benefits like reduced staff turnover and fewer sick days.
To reinforce this point, here are examples of how a poorly chosen shift structure can have a negative effect:
Circadian rhythm disruption
Working against the body’s natural sleep-wake cycle can lead to fatigue, which affects concentration and safety.
A good shift pattern should aim to minimise this disruption where possible, for example, by avoiding fast rotations from night to day shifts.
Work-life balance
Shift work can make it difficult for employees to socialise or spend time with family.
Offering predictable rotas and generous rest periods can significantly improve their quality of life outside of work.
Mental and physical health
Continuous shift work has been linked to increased stress and other health issues.
Regular check-ins with your shift workers can help you identify any problems early and show them that you care about their health.
Practical steps to implement a new shift pattern
Following these steps will help you implement a new rota smoothly and effectively, ensuring you always have the right people in the right places.
1. Planning and preparation
Before you roll out a new pattern, you need to create a solid plan.
Start by refining the chosen shift pattern to fit your specific operational needs.
This involves mapping out the rota for each team, ensuring you have full coverage for every hour of every day you’re open.
You must also conduct a legal and compliance check to confirm the rota meets all Working Time Regulations for rest periods and maximum hours.
2. Designing the shift pattern
Based on your planning, you can now design the rota.
Feel free to mix and match elements from different patterns—the examples given earlier are not set in stone.
It’s best to use a template as a starting point, such as a basic Four-on-four-off or a Continental rota. This will give you a solid foundation to build on.
Ensure you factor in breaks and handovers to guarantee adequate rest and a smooth transfer of duties between teams.
You should also build in some flexibility to handle sick days, holiday requests, and unexpected staffing shortages without a major disruption.
3. Communicating the change
Based on the advice in the previous section about how to choose the best pattern, you will have referred to team feedback in making the decision.
However, your team still needs to understand how the new system will work in practice and how it will affect them.
Announce the change early to give them plenty of notice before the new schedule begins. This gives them time to adjust their personal lives.
You must also explain the “why” behind the change, showing them how the new pattern will benefit the business and them personally.
You may even consider offering a brief training session if the new rota is complex.
4. Monitoring and refining
After a few weeks or a month, check in with your team and ask for their feedback on what’s working and what isn’t.
Also, track key metrics like payroll costs, overtime hours, and employee satisfaction to see if you are saving money and if staff morale is improving.
A great shift pattern is one that evolves with your business, so be willing to make small adjustments based on the feedback and data you collect.
Final thoughts
The right approach to scheduling can transform your operations, helping you manage costs, boost productivity, and keep your team happy.
If you succeed in balancing business needs with the wellbeing of your employees, the rota system you finally decide on will be legally compliant and fair.
It’s an HR strategy that shows a respect for their need for rest and a healthy work-life balance, leading to a more engaged and loyal workforce.
However, creating and managing shift rotas can be a huge administrative burden, especially as your business grows.
Modern digital scheduling tools go a long way to simplifying this process by helping you to design, communicate, and track rotas with ease.
Investing in the right software is a cost-effective way to ensure your schedules are always accurate, compliant, and easy for your team to access.
FAQs about shift patterns
1. What is the best shift pattern for 24/7 coverage?
There is no single “best” shift pattern, as the ideal choice depends on your specific business needs.
However, the Continental and Panama patterns are widely used for 24/7 operations because they provide continuous coverage while balancing working hours with regular rest periods.
2. Are some shift patterns more suited to overtime than others?
Yes, some shift patterns are better for overtime.
The two-shift pattern, for example, naturally allows for overtime by extending hours into the night or weekend.
Similarly, fixed night or weekend rotas often rely on overtime from other staff to cover unexpected absences.
In contrast, complex 24/7 rotas can make overtime difficult to schedule without disrupting the core cycle and causing fatigue.
3. What is the 7-3-7-4 shift pattern?
The 7-3-7-4 shift pattern is a specific rota that typically uses 8-hour shifts to provide 24/7 coverage.
It involves an employee working for seven consecutive days, followed by three days off, then working another seven days, and finally having four days off.
This pattern is designed to provide continuous coverage while creating a balanced mix of workdays and extended rest periods.
As a landlord, the way that you do your accounting related to property income might be changing from April 2026.
Rather than submitting Self Assessment tax returns, you may need to follow Making Tax Digital for Income Tax rules.
To help you understand the new requirements and what they means for landlords, in this article we cover an overview of what Making Tax Digital for Income Tax is, and share answers to questions you may have about it.
Here’s what we cover:
Making Tax Digital: An overview for landlords
Making Tax Digital for Income Tax is part of the UK government’s long-running plans to digitalise the tax system.
Doing so makes life easier for individuals and businesses who, because their records are digital, get improved visibility into their finances. This empowers better decision-making and early identification of issues.
Since 2019, the Making Tax Digital (MTD) programme required VAT-registered businesses over the VAT threshold (then £85,000) to use software for their VAT accounting.
Since April 2022, this requirement was extended to all VAT-registered businesses, regardless of turnover.
As of April 2026, many individuals currently using Self Assessment will be required to switch to using MTD for Income Tax for their income tax accounting and reporting.
This includes landlords, but only those whose income from their property or properties (e.g. rent) exceeds £50,000 per year.
This threshold drops to £30,000 in April 2027 and then to income above £20,000 from April 2028.
Making Tax Digital for Income Tax also affects sole traders.
If a landlord is a sole trader too, then the income from the sole trader business(es) they own, plus the income from properties, are added together for the purpose of determining if that individual is mandated for Making Tax Digital for Income Tax.
If you’ve put your properties into a limited company then, obviously, corporation tax is due on the property income. Therefore, the rental income will not count for the purposes of MTD for Income Tax. Dividend incomes are not currently covered by MTD for Income Tax, so you should continue using Self Assessment for that.
What do landlords need to do for Making Tax Digital for Income Tax?
If you’re within its scope, the rules of MTD for Income Tax are as follows:
Software compatible withMTD for Income Tax must be used for your income tax accounting. All accounting records related to income tax, such as the details from invoices and expenses, must be stored digitally and retained for five years following the end of the tax year. Note that you may need to activate the MTD for Income Tax functionality within your software—speak to your software vendor in advance to ensure compliance.
You or your accountant must register you for MTD for Income Tax before 6 April 2026, if your income is more than £50,000. If you’re already registered for Self Assessment, or have already registered for MTD for VAT, you won’t be transferred across automatically when MTD for Income Tax begins.
You’ll no longer need to send a Self Assessment return for income tax. Instead, there are new quarterly update and digital tax return requirements, as detailed below.
You must submit quarterly updates to HMRC using MTD compatible software. You can send more than quarterly updates if it helps your situation. While there’s no legal requirement for the updates to be fully accurate, it should include all relevant income and expenses to the best of your knowledge. Providing accurate information can help you better estimate your tax and National Insurance liability. If you let property in the UK and abroad, separate updates must be submitted for UK properties and foreign properties.
By 31 January following the end of the tax year, you must use the MTD software to create and sign a tax return. If you have any income from a sole trader business, this will need to be included too.
By 31 January, you’ll need to pay the balance of any tax and National Insurance contributions due. Note that the payment on account system will continue, so you may need to make a further payment on 31 July of the same year.
How do landlords work out their income for Making Tax Digital for Income Tax?
If you’re not a sole trader, all you need do is calculate the rental income you receive from the one or more of the properties you own (or have a share in).
Your property income can include the following:
Rental income from UK land or property
Rental income from foreign land or property
Income from letting furnished rooms in your own home
Income from Furnished Holiday Lettings (FHL) and Non-Furnished Holiday Lettings (non-FHL) in the UK
Premiums from leasing UK land
Inducements to take an interest in letting a property (a reverse premium).
If this total income you receive from property is more than £50,000 from April 2026, £30,000 from April 2027, or £20,000 from April 2028, you must register for and use MTD for Income Tax for your property income.
If you’re a sole trader who uses Self Assessment for other businesses unrelated to being a landlord, it’s a little more complicated.
To work out your income for the purposes of MTD for Income Tax, the rental income should be combined with income from any sole trader businesses you own.
If the total comes to more than £50,000, you need to register for and use MTD for Income Tax for accounting relating to income from your property rental, as well as from your business(es).
Here’s some examples:
Individual A has a property that brings in rental income of £52,000 per year. This is above the initial £50,000 threshold for April 2026 so they will need to use Making Tax Digital for Income Tax for the accounting relating to their property. Additionally, if they carry on employment as a sole trader, they’ll need to use Making Tax Digital for Income Tax for the accounting relating to this, too.
Individual B inherited a property that is rented for £49,000 a year. They have full-time employment and pay tax and National Insurance through their employer’s payroll. Because their income from property is below £50,000, they do not need to use it. Instead, they should continue using the Self Assessment system.
Individual C is a buy-to-let landlord with a property that brings in £48,000 in income through rents each year. They work as a sole trader, with an income of £9,000. The aggregated income is £57,000, which is above the £50,000 threshold. They are required to use Making Tax Digital for Income Tax.
What information do landlords need to send as part of Making Tax Digital for Income Tax?
There’s no real change to the kind of information you’ll need to provide compared to completing a Self Assessment tax return.
For example, you’ll still need to declare your income, and where it came from. You’ll still need to declare your allowable expenses.
The difference is you’ll need to provide this information to HMRC more frequently (at least quarterly), and via MTD-compatible software.
How do landlords sign up to Making Tax Digital for Income Tax?
Although you might be able to join the Making Tax Digital for Income Tax beta programme, you can’t currently sign up to the full Making Tax Digital for Income Tax scheme.
This beta allows landlords to familiarise themselves with the system before it becomes mandatory.
It’s anticipated HMRC will open the portal to sign up to Making Tax Digital for Income Tax closer to the 6 April 2026 mandation date as it’s still in the testing phase.
Should landlords join the Making Tax Digital for Income Tax beta?
Signing up to MTD for Income Tax ahead of time via the beta scheme certainly makes sense if it’s right for you.
You’ll get a chance to get to grips with the requirements and any new software as required, and make use of HMRC’s support services before they become overwhelmed because millions of people are signing up.
If you use an accountant, speak to them ahead of signing up for MTD for Income Tax, because they might need to update their systems too.
There are some limitations as to who can sign-up to the beta programme. Some of those pertinent to landlords are as follows:
You must be up to date with your taxes, including payments.
You must be UK resident.
You can’t claim Married Couple’s Allowance or Blind Person’s Allowance.
You can’t be insolvent, or about to be so, or subject to a compliance enquiry.
I don’t run a business. I receive rental income from a single inherited property. Does Making Tax Digital for Income Tax apply for me?
Yes, if your annual rental income is above £50,000 on 6 April 2026, £30,000 on 6 April 2027, or £20,000 on 6 April 2028.
If you rent out property, then HMRC considers you to be running a business. It doesn’t matter if you’re employed full time doing something else and already pay taxes that way.
Your work as a landlord might be part time, only letting a holiday property, or even something that demands hardly any of your time, but the income must still be declared.
I receive income from shares in a Real Estate Investment Trust (REIT). Does Making Tax Digital for Income Tax affect me?
No. As of MTD for Income Tax’s launch in 2026, only rental income from property ownership will be considered to be within scope.
Income from shares in a REIT is considered investment, not rental income. As such, it’s not within the scope of MTD for Income Tax.
I’m a buy-to-let landlord. Does Making Tax Digital for Income Tax affect me?
Yes—if the rental income you receive personally is more than £50,000 (or is above £50,000 when combined with sole trader income) from April 2026, £30,000 from April 2027, or £20,000 from April 2028, then MTD for Income Tax applies.
If your buy-to-let properties are owned by a limited company you set up for the purpose, MTD for Income Tax won’t apply.
Are Furnished Holiday Lettings (FHLs) included in Making Tax Digital for Income Tax?
The government announced as part of the 2024 Spring Budget that the FHL scheme would be abolished from 6 April 2025.
This was confirmed following the most recent general election and means income from FHL is treated the same as other property income for tax purposes, and the separate FHL rules no longer apply.
I jointly own a rental property with another person. How is this handled for MTD for Income Tax?
Put simply, there are no significant changes compared to how joint landlords already handle sharing income and expenses for Self Assessment.
Married couples jointly owning a rental property will split income and expenses 50/50, and their share of the income will be considered for the purposes of MTD for Income Tax. Note that only the individual’s share of the income is considered, and not the total income from the property.
Other types of shared ownership outside marriage will likely have an existing split for income and expenses which again will be carried across to any MTD for Income Tax considerations.
If your share of the income from property rental (plus any sole trader businesses) takes you above the MTD for Income Tax threshold then you must follow the MTD for Income Tax rules. You will then use this share of the income (again, not the total income from the property) for quarterly updates and the final tax return.
This means that, with joint ownership, both owners may need to use separate MTD-compatible software if they’re required to follow the MTD for Income Tax rules.
Is rental income from foreign (non-UK) property I own included in Making Tax Digital for Income Tax?
Yes, if you are domiciled in the UK, and your rental income is above either threshold (as mentioned above, if you’re a sole trader then income from your business also contributes to this threshold).
Any foreign income, including property rental, must be reported separately to your UK income. This means separate quarterly updates.
For those not domiciled in the UK, only UK self-employment or UK property income counts toward the MTD qualifying threshold.
As with the existing Self Assessment scheme, you may be able to claim double tax relief if the income is also taxed in the country where your property is.
Does Making Tax Digital for Income Tax apply to rental income from flats/apartments?
If the rental income is over the threshold (or is above it when combined with sole trader income) then MTD for Income Tax applies.
No distinction is made for the type of property.
Whether the property is furnished or unfurnished has no bearing on MTD for Income Tax either. It’s solely about the rental income an individual receives and for which income tax is therefore due.
Similarly, income from commercial lets is also within scope of MTD for Income Tax if the threshold is breached and that property is owned by an individual (or more than one person).
If I sell or dispose of a property, does the income count towards Making Tax Digital for Income Tax?
That would typically be classed as a capital gains tax, so is outside the scope of MTD for Income Tax. Speak to an accountant if you’re in any doubt.
I’m already registered for Making Tax Digital for VAT. Do I need to register for and/or use Making Tax Digital for Income Tax?
Yes, if your property income is above the threshold (either on its own or combined with your income from sole trader businesses you own).
MTD for VAT and MTD for Income Tax are independent of each other. They apply to different types of tax.
I own a share of a property and receive a share of the rental income. Does Making Tax Digital for Income Tax apply?
HMRC has introduced easements for joint property owners under MTD for Income Tax.
These allow joint owners to report gross rental income in their quarterly updates and provide expense details during the year-end finalisation.
Furthermore, joint owners can maintain a single digital record for each category of income and expense related to the jointly held property, simplifying the reporting process.
MTD for Income Tax will apply if this income is above the threshold (either on its own or combined with your income from sole trader businesses you own).
Does the Making Tax Digital for Income Tax threshold apply to each property?
MTD for Income Tax thresholds apply to your total income. It doesn’t matter if this income is from one small flat or a portfolio of houses, it’s the total income that’s used in the calculation.
The income threshold applies to your personal income for which income tax might be deducted —whether that’s from rental income, or income from any sole trader business(es) you own.
Is it just rental income from property that’s considered for Making Tax Digital for Income Tax?
If you keep any tenancy deposit for repairs then, as currently, this will be considered income and then whatever you spend on the repair could be considered an allowable expense.
As for other types of regular income from a property, it’s not yet clear. There might cases where ongoing royalties on mineral rights are received, for example.
These might need to be included alongside rental income, but you’ll have to consult the wording of the MTD for Income Tax legislation to be sure.
My properties are owned by an incorporated company, from which I pay myself a salary and/or dividend. Does Making Tax Digital for Income Tax apply?
In short, it’s unlikely MTD for Income Tax will apply.
Since the properties are owned by the incorporated company, corporation tax will apply to the rental income.
If you’re employed by the company, and your salary is paid through its payroll (PAYE), MTD for Income Tax will not apply to your salary.
Dividends from the company should be reported and paid through the usual Self Assessment route and are not within scope of MTD for Income Tax at the present time.
If any property is disposed of, the income would be considered a chargeable gain for corporation tax purposes.
Can I leave it to my accountant to handle Making Tax Digital for Income Tax for my properties?
Yes and no.
You’ll need to use software for your accounting relating to income tax. That can’t be avoided.
Considering the admin time savings modern cloud accounting software offers, this is something that should be embraced.
However, you can still rely on an accountant to work out your quarterly updates and tax return each year. They’ll be able to help you make any necessary adjustments and reliefs.
They can submit the quarterly updates for you, but you’ll still need to review and sign the tax return.
Irrespective of whether you calculate and submit the quarterly updates and end of year totals, or your accountants does this for you, as the taxpayer you remain responsible for ensuring the information is submitted and for any tax that may be due.
I’m new to being a landlord, having only just purchased or inherited a property. When will Making Tax Digital for Income Tax apply to me?
In theory, if your property income is over £50,000 then MTD for Income Tax applies (with the sole trader proviso, as above) from 6 April 2026, £30,000 from 6 April 2027, or £20,000 from 6 April 2028.
However, the reality is that nobody goes straight into following the MTD for Income Tax rules. New landlords or new sole traders first have to register for Self Assessment and complete a tax return. Based on the gross income you declare, HMRC might then decide you should use MTD for Income Tax, but you won’t be required to do so until the start of the next tax year.
In other words, you’ll have to undertake two full years of Self Assessment.
You can sign up voluntarily to MTD for Income Tax after you’ve started Self Assessment. This can be done even if your income does not reach the threshold for inclusion. You’d then start MTD for Income Tax at the start of the next tax year, but you’ll still have to complete a year of Self Assessment.
If I have to keep a tenancy deposit to pay for repairs, is it included in my Making Tax Digital for Income Tax calculations?
Yes, but only if you don’t return any of it to the tenant.
It will be considered income and then whatever you spend on the repair could be considered an allowable expense.
If in doubt, consult an accountant.
How to get started with Making Tax Digital for Income Tax if you’re a landlord
Making Tax Digital might sound daunting but it doesn’t have to be the case.
Here are the steps to get started with it:
1. Sign up ahead of time
The start date for those accounting for income for property through MTD for Income Tax is 6 April 2026. This is known as the digital start date and rental income received after this date must be accounted for using MTD for Income Tax.
2. Consider joining the beta
This lets you sign up for MTD for Income Tax earlier than the mandated digital start date.
Your Self Assessment returns and payments must be up to date. See above: Should landlords join the MTD for Income Tax beta?
3. Update to accounting software that’s ready for MTD for Income Tax
You must use software for your accounting relating to income tax, and it needs to be compatible with MTD for Income Tax.
You should ensure any software you use is updated in time. You might find that some older accounting packages won’t be updated.
Cloud accounting software will almost certainly be updated well in time—but consult your software vendor to check.
If you use separate software for managing property income, you’ll need to ensure it’s digitally linked to your MTD-compatible accounting software. Note that copying or cutting and pasting accounting data between two places isn’t permitted under the MTD for Income Tax rules, which can create issues when using spreadsheets to track things like depreciation of furnishings.
4. Here’s the initial timeline of requirements for landlords using MTD for Income Tax from April 2026
This is a minimum list of requirements.
You can make more than quarterly updates, for example, if that suits your admin processes. And remember that you may need to make additional updates, not listed below, if you also have any sole trader businesses:
Before April 2026, sign up for MTD for Income Tax (assuming you haven’t already signed up to the beta). Potentially upgrade your accounting to MTD for Income Tax-compatible software and inform your accountant.
For those in the beta, you should be able to submit your quarterly returns for the 2025/26 tax year through MTD as usual.
For those submitting Self Assessment tax returns, the 2024/25 tax year’s final income amount will determine if you might already fall into the scope of MTD for the 2026/27 tax year. HMRC will inform you by writing if this is the case.
HMRC has outlined the deadlines for quarterly submissions as follows:
Update period
Update deadline
6 April to 5 July
7 August
6 July to 5 October
7 November
6 October to 5 January
7 February
6 January to 5 April
7 May
The tax return is to be sent by 31 January of the first year after the tax period, just as you would for a Self Assessment tax return, but through your software.
Final thoughts on Making Tax Digital for Income Tax for landlords
MTD for Income Tax is a landslide change for landlords and sole traders. It impacts millions of individuals; some of whom may not even realise they’re running a business and that MTD for Income Tax therefore applies to them.
Because accounting relating to property income can be simply a matter of logging rents alongside any money spent on the property, you might still be using written record-keeping, or a spreadsheet.
The legally enforced requirement to use software may come as a surprise.
Spreadsheets can be used for MTD for Income Tax accounting but are unlikely to be a user-friendly option considering the need to submit regular updates (they can be used elsewhere within your accounting, as required, of course).
Preparation work for Making Tax Digital for Income Tax should begin sooner rather than later.
April 2026 will be here before we know it. Diving head-first into Making Tax Digital for Income Tax when you have no choice is unlikely to be a pleasant experience.
Starting now with your preparations, and getting up to speed ahead of time, will bring the best results for you.
Editor’s note: This article was first published in July 2021 and has been updated for relevanceseveral times to track developments.
There’s surely few accountants and bookkeepers who have not have heard of MTD for Income Tax. With the first introduction date of April 2026 rapidly approaching, much work needs to be done for practice readiness.
This article can help. Read on to learn how you can get to grips with MTD for Income Tax across what you do, regardless of the size of your practice or the nature of your clients.
Here’s what we discuss:
Making Tax Digital for Income Tax: An overview
The government has said MTD for Income Tax will be mandated in at least three phases.
It will affect sole traders and landlords (or individuals who are both) that have gross income above £50,000 from April 2026, above £30,000 from April 2027, and above £20,000 from April 2028.
As happened with MTD for VAT, clients will turn to accountants for advice and guidance.
More than this, the government is again likely relying at least partially on accountants to educate their clients about the requirements and ongoing process adaptations.
It’s vital to realise how Making Tax Digital for Income Tax provides opportunities:
Clients can modernise their accounting processes, to get the benefits of massively reduced admin and a closer, more active relationship with their accountant. Considering AI productivity assistants are now within accounting software, the improvements could be revolutionary—and not as technically onerous compared to the old days.
Accountants have an opportunity to grow their services via increased client touchpoints through quarterly updates and the digital tax return—not to mention initial guidance on signing up, adjusting admin processes, and helping with software choices. Better and accurate visibility into client data can inspire a vast range of services.
If your practice has income tax clients that fall under the scope of MTD for Income Tax, you need to start putting plans into practice today, if you haven’t already. The scale of clients impacted, which is significantly higher than for VAT a few years ago, means the quantity of work cannot be underestimated.
What is the MTD for Income Tax digital start date for my client’s business?
Most businesses within scope will be required to follow MTD for Income Tax rules in their first full accounting period starting on or after 6 April 2026, if their self-employment yearly gross income is above £50,000 (as of 2024/25), 6 April 2027 if it’s above £30,000 (as of 2025/26), and 6 April 2028 if it’s more than £20,000 (as of 2026/27).
HMRC will inform clients in writing if they need to use MTD for Income Tax.
For accounting periods prior to their MTD start date, those within scope will continue to use the Self Assessment system for the business.
In other words, even after signing up for MTD for Income Tax, your clients will still need to submit a Self Assessment return for the 2025/26 tax year by 31 January 2027, or 30 December 2026 if they want HMRC to collect taxes due from wages and pensions via PAYE (although if they’ve already signed up for the MTD for Income Tax pilot, this will not be required).
Self Assessment will still be required for individuals outside of the scope of MTD for Income Tax, such as those below the threshold, some company directors, or those whose gross pension income is above the personal allowance.
Which clients will be affected by MTD for Income Tax—and how?
To fall under the MTD for Income Tax scope, all of the £50,000/£30,000/£20,000+ income will have to come from either sole trade businesses, or property rents, or a combination of both. No other income matters for this calculation.
For example, should one of your clients have just £49,000 from property rental to declare for income tax, and £2,000 from savings interest income, that won’t require them to sign up for MTD for Income Tax. All of this is before allowable expenses, of course.
But if they had £45,000 from sole trade income and £10,000 from property rental income, then their gross income will be £55,000—pushing them above the threshold for the April 2026 rollout. HMRC bases their decision for this based on the gross income for the 2024/25 tax year, as shown on the Self Assessment tax return.
Care needs to be taken, however, because for some clients, 2024/25 may have had an unusually long basis period because of basis period reform (BPR) measures. Therefore, their earnings might be artificially high. If you believe this is the case for your client, and that their income is typically below the threshold, contact HMRC to discuss the issue.
Those new to a sole trader or property rental will use the Self Assessment system, and never go straight to using MTD for Income Tax, even if it’s clear their income will rise above £50,000 (or £30,000/£20,000 as of 2027/2028).
Effectively, this means these clients will always complete two years of Self Assessment prior to moving to MTD for Income Tax, unless they opt to voluntarily do sign-up. This can be done even if their earnings are below the threshold. If this option is chosen, the client will complete a single year’s Self Assessment before moving to MTD for Income Tax at the start of the subsequent tax year.
What are MTD for Income Tax accounting quarterly updates and the digital tax return?
For those signed up to MTD for Income Tax, there will no longer be a need to send a Self Assessment tax return with regard to income for the tax years occurring after their start date.
Instead, updates will be made to HMRC using functional compatible software, as follows, along with a tax return by 31 January.
Here are the MTD for Income Tax requirements in brief:
Digital records for MTD for Income Tax
A digital record is a line item of income or expense, which is to say, each transaction. The minimum data that needs to be recorded is as follows:
Amount.
Date.
The tax category, as defined by HMRC, such as turnover, cost of goods bought for resale, or wages, salaries and other staff costs. Car, van and travel expenses are also categorised.
Obviously, MTD-compatible accounting software will make it easy to record these details via automation.
None of this is outside the scope of data already recorded for Self Assessment, of course. The difference is simply that it must be recorded ASAP, and certainly prior to any quarterly update submission.
Quarterly updates for MTD for Income Tax
These are generated in MTD-compatible software by you or the client. You or their bookkeeper can submit them on behalf of the client.
Totals must be provided for each income and expense category for the previous quarter. HMRC does not require individual income or expenditure records at this point, or for the tax return.
The latest each update can be sent is 7 August (for the 1st update covering period ending 5 July), 7 November (for the 2nd update covering period ending 5 October), 7 February (for the 3rd update covering period ending 5 January) and 7 May (for the 4th update covering period ending 5 April). This is true even if the client uses the fiscal year (1 April – 31 March) for their basis period.
An update doesn’t include any obligation or statement that the data is complete and accurate, and no tax is paid at that point.
Corrections for previous quarters can be sent, too.
HMRC returns a calculation of the estimated tax liability based on the information sent. This should be discussed with clients, with potential inaccuracies notified (pending later adjustments).
Digital tax return for MTD for Income Tax
Very similar to Self Assessment, the tax return is to be completed and submitted via MTD-compatible software at the end of the tax period or any point after this date and up to the following 31 January.
A separate Business Source Adjustable Summary (BSAS) can be requested from HMRC, via the MTD-compatible software, for each business and property income. This is the foundation used by accountants to make adjustments for each income source, such as capital allowances, private use adjustments, corrections, and disallowable expenses. Accountants should not simply use the fourth quarterly update as the numbers for the tax return. BSAS totals are not a substitute for completing the digital tax return and accountants must make adjustments as required.
Remember that the MTD rules mean any adjustments/corrections must be undertaken in MTD-compatible software and legally-compliant digital links must be used between software and systems if data is transferred (e.g. from a spreadsheet to accounting software—it is not legally possible to cut/copy and paste data).
The submission is a declaration that the information is complete and correct. The client must review and sign. As with Self Assessment, you are unable to do this for them.
Once submitted, HMRC returns a tax calculation.
The digital tax return effectively replaces the SA100 tax return. Additionally:
31 January continues to be the deadline for filing.
Any income tax liability must also be paid by 31 January (payments on account will continue).
HMRC will not provide any submission interface to allow filing without the need for software. In other words, MTD-compatible software must be used all the way through. If more than one piece of software or system is used, it must be digitally linked in a legally-compliant way.
If any information that needs to be included in the final declaration isn’t supported via software submission, then the client will also need to complete a Self Assessment tax return.
However, if data cannot be submitted digitally for whatever reason, then a SA100 may still be required.
Supplementary forms for income tax like SA102, SA105 and so forth, are no longer required because of the use of quarterly updates to provide the data or the fact the software is connected to HMRC, so can automatically pull in detais like employment income.
What information will clients submit for MTD for Income Tax?
The following are non-exhaustive lists and subject to change and confirmation by HMRC.
For a self-employment business, the data required is likely to include:
Business income (e.g. turnover)
Business expenses (total and disallowable by type of expense, such as travel costs)
Tax allowances for vehicles and equipment (e.g. capital allowances)
Adjustments (e.g. basis adjustment)
Balancing charges
Goods and services for client’s own use.
For a property business, the data required is likely to include the following:
UK and foreign property business income
UK and foreign property business expenses (e.g. premises running costs)
Allowances for property (e.g. annual investment allowance)
Adjustments on property letting (e.g. loss brought forward)
Balancing charges.
For the tax return, the individual is likely to be required to include the following among other things:
Total UK dividend income for a tax year
Taxed UK savings interest
Untaxed UK savings interest
Other income sources
Any claims or elections.
Can clients opt out of MTD for Income Tax?
As with MTD for VAT, it won’t be possible for most clients to opt out of MTD for Income Tax if they fall within its scope.
However, if they joined voluntarily in the public beta, they can opt out.
And that’s also the case if they’re in specific categories that are automatically exempt, including:
Trustees
Personal representatives
Foster carers
Those without a National Insurance number in the January before the start of the tax year.
Non-resident companies.
Those who fall under the digital exclusion rules as defined by MTD for VAT will automatically be exempted from MTD for Income Tax (although there will be no harm in checking this!).
This includes people whose disabilities mean they can’t use software, for example, for people whose remote location means internet access is impossible.
Additionally, your clients will be exempt from Making Tax Digital if their qualifying income falls below the threshold for three consecutive tax years (bearing in mind this threshold will fall each year after 2026, until reaching £20,000 for 2028/29.
What software do clients require for MTD for Income Tax?
Clients will require MTD-compatible software of some kind. Understandably, they may look for free solutions. Sage Accounting Individual Free is a great example, and can help clients with simple tax affairs manage their finances with software that makes bookkeeping, transaction tracking, and both MTD for Income Tax and Self Assessment easy.
However, as an accounting professional, you will require them to have more sophisticated software if you intend to collaborate with them for quarterly updates and the tax return. There are a variety of Sage Accounting plans to meet both yours and your client needs, and will grow in features as they grow, too. Examples include VAT accounting and payroll.
A Sage for Accountants plan offers the chance to upsell Sage Accounting directly to clients, and comes with a host of free software for accountants, such as Final Accounts and Tax, Client Management, plus free AutoEntry, GoProposal and Futrli credits each month.
Most of the big-name cloud accounting software has already been updated for MTD for Income Tax, although this might not necessarily be true for desktop accounting software. You or your clients may need to consult the software vendor to ensure updates and patches are installed in time.
Older software packages that are no longer supported may not be updated, so might require the client migrate their accounting to a different package.
It will be possible to use spreadsheets for MTD for Income Tax accounting through the use of either bridging software, or special spreadsheets/worksheets that facilitate digital linking with cloud services.
Remember that the digital linking rules say that copying and pasting of MTD accounting records is not allowed, and all transfer of MTD for Income Tax data must be both digital and automated.
Because of this and other issues, using a spreadsheet is unlikely to be the most user-friendly solution.
Additionally, MTD-compatible software must be able to:
Create and store digital records
Send quarterly updates
Submit the final declaration
Receive information from HMRC.
What is digital linking for MTD for Income Tax?
You may recall the digital linking rules from the implementation of MTD for VAT.
In summary, it aims to legally enforce a fully digital path for relevant tax data once it has entered the system.
For example, once an expense record is entered into accounting software, that value cannot then be copied into a spreadsheet for further processing, before being pasted back. The expense record must be transferred digitally by the software, via the cloud, for example.
There’s less of a focus on digital linking in MTD for Income Tax because there are likely to be fewer interconnected applications or systems compared to VAT. But it still applies if spreadsheets are in use, as a key example, and could impact retail clients who use electronic point of sale (EPOS) systems with accounting software, or who use online auction software.
In such a case, the two (or more) systems must be digitally linked in a legally compliant way, typically by sharing data in the cloud (e.g. the EPOS system will be available as an add-in extension for the accounting software, via the accounting software’s App Store).
Furthermore, if you work with clients then you’ll need to ensure data transfer happens digitally (although emailing and transferring files via a USB memory stick are acceptable).
Do clients signed up for MTD for VAT need to sign up for MTD for Income Tax?
The two Making Tax Digital schemes for VAT and Income Tax operate independently, with their own sign up criteria.
It isn’t the case that MTD for Income Tax applies only to those already using MTD for VAT—although many businesses already using MTD for VAT will find themselves having to sign up for MTD for Income Tax too.
What are the MTD for Income Tax easements for clients?
Following feedback, HMRC has provided a handful of easements to assist certain kinds of businesses:
Joint property ownership
A joint owner of a property only needs to submit their own share of income and expenses (e.g. one record for each), and not the full figures for the property.
They will need to provide records for total rent, other income from the property, premiums for the grant of a lease, and reverse premiums and inducements. For expenses, records should include property repairs and maintenance, residential finance costs, professional fees, and more (for more details, see sections 2.1 and 2.2 of HMRC’s MTD for Income Tax Update Notice).
Each joint owner will need to separately and independently follow the MTD for Income Tax rules, however, such as using MTD-compatible software. Furthermore, legally-compliant digital linking is required between applications and systems. Landlords who use spreadsheets to track depreciation of assets cannot copy and paste data into their accounting software, for example. In situations like this, use of professional MTD-compatible property management software is advisable.
3-line accounts
Already possible for Self Assessment, this easement can also be used for MTD for Income Tax.
Clients with an annual turnover below the VAT registration threshold (currently £90,000) may opt to submit total income and expenses rather than breaking these figures down by tax category.
However, given the requirement to keep digital records of income and expenditure in any event, and the use of MTD-compatible software that will automatically produce detailed quarterly updates and a tax return based on those records, it’s unclear how useful this easement will be.
Retail sales
Clients may choose to record the daily gross takings for all retail sales as a single digital record. This must include all payments from cash paying customers, plus credit sales, gift card redemptions, sales competed via third-party booking platforms, and so on. For more details, see section 3 of HMRC’s MTD for Income Tax Digital Record Keeping Notice.
What does MTD for Income Tax means for accountants?
It’s hard to overstate the changes MTD for Income Tax will bring for you.
Here are two things to be aware of:
1. Your clients will have to use software
Your clients will be required to use compatible software to record their business and property income and expenditure and send five updates/reports every year to HMRC.
There’s likely to be automation for each of these steps, minimising the administrative impact. But your clients still need to be aware of the requirements expected of them.
This will require a substantial change in attitude from your clients in how they approach their accounting.
It’s certainly the case that the “shoebox” client who dumps receipts on their accountant’s desk in January each year will have to change their ways.
It’s your role to communicate this need for change, and to encourage it to happen.
In return, you’ re given significant privilege to guide your clients towards the best solution for their needs—and to bring positive changes to their clients’ businesses.
This presents additional opportunities.
Not partnering with a software vendor to sell solutions to your clients, for example, is to discard a potentially large income source.
Needless to say, an MTD for Income Tax-compatible cloud accounting solution that ties into your own systems is best for both you and your client.
You can offer training in the software, perhaps as part of the sales package, or as a separate service offering.
At the very least, every UK accountant will need to be proficient in the free software package the government will probably offer, because accountants will be facing client enquiries about this on a very regular basis.
2. You have the opportunity to offer additional advisory services
Although MTD for Income Tax should mean clients are more aware of their accounting, it doesn’t mean your fundamental role will change.
You’ll still be required to help your clients be compliant, and to support them with fundamentals such as making deductions and calculating a final income tax bill.
While it’s possible some small business owners may have an epiphany moment when they get to grips with accounting software and realise the power it delivers, the fundamental fact that many people hate dealing with figures and the ensuing admin burden isn’t going to change.
You have nothing to fear from technology and, in fact, lots to gain.
But this is only scratching the surface of the potential that MTD for Income Tax will deliver.
You’ll go from having a single point of contact each year to potentially having at least five situations where your clients may need help with their accounting when they make those quarterly reports and the final declaration.
These situations can be used to forge stronger relationships where you’re not viewed as just a number cruncher but more of a business partner.
Using cloud software that ties in with your clients’ accounting gives you the ability to monitor for problems or opportunities, and to provide advice based on this.
Final thoughts on MTD for Income Tax
If your practice dealt with the implementation of MTD for VAT ahead of it being mandated in April 2019, you’ll be well aware that starting early with preparations will put you and your clients in good stead.
If it didn’t, the best advice is to start now.
Look at your processes, start talking to your clients, and take the steps now to not only meet the requirements for MTD for Income Tax but to use it as an opportunity to help your practice and your clients really flourish.
Editor’s note: This article was first published in October 2020 and has been updated for relevance.
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Buying or owning property for rental is popular in the UK.
Good financial record keeping for landlords needs to be at the centre of any property rental planning.
In this article, we examine what landlords need to know about accounting and bookkeeping, so you can be sure to stay on the right side of the law—while maximising income.
Here’s what we cover:
Landlords and taxes—the reason for financial records
If you get rental income from privately owned property then two things are true:
You’re a landlord (even if you don’t think of yourself as one).
It’s very likely you have to pay income tax on the rents you receive.
This is a key reason why you need to keep good financial records.
HMRC has suggested 700,000 landlords either don’t pay tax, or don’t pay enough. It has even created the Let Property Campaign as a form of amnesty so landlords can come clean and pay up.
Tax also needs to be paid on additional payments you receive for the use of furniture, or any services you provide, such as heating, repairs, and cleaning of communal areas such as hallways.
But the good news is that you can deduct expenses and allowances from the income.
What you’re left with is the profit upon which you pay income tax.
(Note that you can’t claim expenses if you’re claiming the tax-free property income allowance when your rental income is less than £1,000.)
Most private landlords use the Self Assessment system to calculate and then pay their taxes, and there are special boxes on the Self Assessment tax return that relate solely to property income, expenses that relate to the income, and exemptions.
If you complete a paper-based return, these boxes are included on the SA105 form, which should be submitted as a supplement to your Self Assessment tax return (SA100).
What kind of landlord am I?
Most small landlords within the UK are private individuals who use Self Assessment to declare and pay income tax due on rental income—and that’s what we focus on here.
But let’s briefly look at the different kinds of landlords that exist when it comes to taxation:
Resident landlords: Those letting a room in their own home might be able to use the Rent a Room scheme. This means the first £7,500 of rental income is exempt from tax (£3,750 if you jointly own the property). If the room(s) you let are bed and breakfast, or you’re operating a guest house from your home, then this is considered a trade and not rental income.
Professional landlords: Those who privately own and rent properties as a full-time occupation are considered to be operating a trade. This means they not only pay tax but also National Insurance contributions. A professional landlord is typically defined by the fact being a landlord is a person’s main job. They will also own multiple properties and typically are actively looking for more.
Limited company: Incorporating a company and putting your properties into it is becoming increasingly popular for semi-professional landlords. This means corporation tax becomes due, rather than income tax, and this can be more tax efficient. The individual receives income by optionally taking dividends from the company.
There was also a former type of category called furnished holiday lettings, or FHL. There were special tax rules for FHL such as being able to claim Capital Gains Tax relief for traders, being able to count profits as earnings for pension purposes, and considering items capital allowance purposes. However, FHL was abolished by the UK government as of April 2025, and FHL properties are now considered just like any other rental property for income tax purposes.
Why do landlords need to keep financial records?
For smaller landlords, it might seem ridiculous to keep financial records. After all, it’s a very predictable income.
You receive a set amount each month, that you mention on the Self Assessment return in January each year.
Why is record keeping for landlords even required?
There’s a handful of very good reasons, as follows:
The government requires you do so. As mentioned above, it’s all about tax. We explain exactly what you need to keep below, and for how long, but this is a basic part of the Self Assessment rules.
Working out your expenses. You might be spending the odd bit of cash here or there paying for things such as a new fridge for your tenants, or minor repairs. You might consider these inconsequential to the point where you don’t even make a note. But they can add up and can reduce your tax bill.
Accurately claiming tax relief. This allows private landlords to potentially claim relief on finance costs at the basic rate of income tax (20%). Depending on your personal circumstances and the amount of your expenses, this can reduce the amount of tax you pay. Higher-rate taxpayers cannot claim additoinal relief on finance costs.
There are other miscellaneous other reasons why good record keeping for landlords is vital, such as it being a requirement if you intend to purchase more properties in the future.
For a buy-to-let mortgage, lenders will want to see how effective your existing rental business has been, and how well you’ve managed the property.
And depending on what kind of accounting method you use (cash accounting vs traditional accounting), you might be able to bring losses forward across tax years.
Again, you will need good accounting records to be able to do this.
What is Making Tax Digital for Income Tax and how does it affect landlords?
Perhaps the biggest reason for good financial record keeping for landlords is the impending introduction of Making Tax Digital (MTD) for Income Tax (also known as MTD for Income Tax),
MTD for Income Tax starts as of April 2026, so affects the 2026/27 tax year.
Inclusion and start dates
MTD for Income Tax is being introduced in three phases, starting in April 2026. Whether you’ll need to follow the MTD for Income Tax rules will depend on the gross income you receive from your rental property (or properties).
If you work as a sole trader, then the gross income from your businesses are also added to this gross income total to decide if you need to follow the MTD for Income Tax rules.
You’ll need to follow MTD for Income Tax’s rules as of the following dates, dependant on the gross income:
April 2026: If you have gross income over £50,000 in the 2024/25 tax year and subsequent tax years.
April 2027: If you have gross income over £30,000 in the 2025/26 tax year and subsequent tax years.
April 2028: if you have gross income over £20,000 in the 2026 to 2027 tax year and subsequent tax years.
Digital record keeping
Software must be used to keep accounting records relating to sole trader and landlord income that you declare as income tax.
For example, data from invoices you send or receive must be stored digitally, using MTD-compatible software, as must expenses.
Updates
Using MTD-compatible software, you’ll need to make at least quarterly updates to HMRC for your total rental income and expenses across the properties you own.
Depending on the software you use, these will be largely automated, so shouldn’t be too difficult. You’ll just need to review, and the click or tap to submit.
By 31 January each year, you’ll also need to provide a single tax return for all your income. This replaces the Self Assessment tax return, and you’ll also use it to tell HMRC about things like taxable interest on savings, for example.
Joint property ownership
If you jointly own a property with another person, then you only need to account for your share of the rental income and expenses. You don’t need to provide full income and expenses details for the property.
Digital linking
Potentially one of the trickiest areas of adopting MTD for Income Tax for landlords could be ensuring compliance with the digital linking requirements.
Put simply, it’s a legal requirement within MTD to ensure that relevant tax data is transferred in a digital way once it’s in the system. It’s not legally compliant to copy/cut and paste data between two places, and nor is it possible to write it down and then enter it manually. It must be digitally transferred via features built into the software, for example.
For landlords that use spreadsheets for a variety of purposes, such as monitoring depreciation, this could present challenges. A solution is simply to use dedicated MTD-compatible property management software that automatically enables correct and legally-compliant digital linking between systems and applications.
What records should landlords keep and for how long?
HMRC currently requires you keep details of the following as part of the Self Assessment rules:
Dates when you let your property. This will be listed on any tenancy/lease agreements that you should be keeping anyway.
Rental income you receive, including rent books, receipts, invoices and bank statements relating to this. Remember that weekly rents always require a rent book, but a tenant can request one in any event—and the law says you must comply.
Income from services you provide to your tenants, such as if you charge them for repairs.
Allowable expenses you wish to claim and that you pay in order to run the property. This could include receipts or invoices, for example. It could also include non-property-specific things such as mileage that you claim while carrying out your property business work.
Where should landlords keep financial records?
Until the introduction of MTD for Income Tax in April 2026, which legally requires you keep digital records if income is above £50,000, you can keep records on paper or using software.
Whatever you choose, the records must be accurate and legible. HMRC can impose a penalty if this isn’t the case.
In other words, you should always assume a third party will view your financial records.
If using a computer, you can use spreadsheets or dedicated accounting software.
Once MTD for Income Tax is introduced in April 2026, and if you have to follow the rules, you must use software for accounting relating to income tax.
This could be a spreadsheet but you’ll need to use an add-on called bridging software that communicates with HMRC in order to submit the periodic updates and tax return.
Because this can be something of a messy solution, most landlords will use accounting software.
HMRC says two million small businesses, landlords and the self-employed who are expected to start using MTD for Income Tax already use software.
How long should landlords keep financial records?
Until MTD for Income Tax begins, private landlords must follow the rules of Self Assessment, which state that non-business records must be kept for at least 22 months after the end of the tax year, but rental income records must be kept for at least five years.
In other words, for the 2026/27 tax year that ends in on 5 April 2026, you’ll need to keep the records until the end of January 2033.
5 top tips on keeping good financial records
Here are five tips to help you keep good financial records if you’re a landlord.
Providing expert input is James Wood, Policy Manager for the National Residential Landlords Association (NRLA).
1. Use software and apps
A key trick to happy landlord financial record keeping is to ensure the vital data, such as money spent or received, is transferred into your accounting system as soon as possible.
“Anything that you can do to make sure that your record-keeping is up to date is always going to be a bonus,” says James.
“The vast majority of landlords do this in addition to their other work.
“So, anything like apps that can save time and allow you to accurately record details is going to be an improvement.”
Nowadays, you can get apps for your phone or laptop that make this a cinch—everything from automatically reconciling bank payments, to scanning in the details from receipts and invoices by simply taking a picture of them.
Why make life harder for yourself by recording everything on paper, or by trudging through spreadsheets?
2. Work to a monthly schedule
Most rents are paid monthly, and you’re probably already used to checking the bank account around that time.
Why not use the opportunity to take care of bookkeeping/accounting tasks at that time, too?
“Landlords need to be keeping records of both their rental income and any times where the rent has not been paid,” says James.
“That can all go into a singular rent statement. It makes sense to record any outgoing expenses at this time, too.”
In other words, doing a little bit at a time means you can keep on top of it—and you also get the satisfaction of sleeping at night knowing everything is running smoothly.
Don’t let all this important data linger as a pile of paperwork that you hate tackling each January.
Doing a little at a time also helps avoid errors that creep in if you tackle a mountain of paperwork all at once.
3. Get confirmation from tenants
“When a tenancy begins, you’re required to provide a significant amount of paperwork,” says James.
This includes the tenancy agreement, of course, but also things such as mandatory safety certificates that must be handed over to tenants.
It’s about ensuring compliance with legal requirements.
“The most important thing in being a good landlord is knowing what the regulations are, and showing that you’ve complied with them,” continues James.
“A good idea is to use a checklist that tenants sign, to show you’ve complied with everything.
“If you don’t get evidence then later on you may have to serve the paperwork again to the tenant, which increases your workload.”
4. Get expert help
“Tax can be an extremely complex area,” says James.
“A lot of the time it depends on specifics of your property and your personal situation as to what you write on the Self Assessment form.”
There are accountants and tax advisers who are experts in property rental. Examples of those the National Residential Landlords Association (NRLA) suggests its members consult include Rita 4 Rent, Tax Scouts, and Less Tax 4 Landlords.
As well as being able to simply hand off your accounting, tax experts such as these are also likely to be full of wisdom built up over years.
Sharing it with you is simply part of their job.
Thinking of expanding your portfolio, for example? They’ll know the best way to be tax-efficient, and how to make life easier when it comes to accounting.
“The best advice for anybody starting out is to ensure you’re aware of your role and requirements,” says James.
“There’s a huge amount of regulations to follow and understand. Ignorance of the law is no excuse.
“A big hidden cost can be enforcement action against you—from HMRC, your local council, and others. It can be difficult without specialist support through organisations like the NRLA.”
5. Switch to cash basis accounting
This is the default accounting method for new landlords since 2017, but if you’ve owned rental property for longer then you might’ve been forced to use accrual (traditional) accounting.
Cash basis offers a number of advantages for landlords, perhaps the biggest of which is simplicity.
Switching from accrual to cash basis accounting is straightforward, and involves a handful of adjustments.
Final thoughts on landlords keeping financial records
Some might be surprised to learn that accounting for landlords is more sophisticated than it might sound. There are certainly more obligations than it might seem at first glance.
Add in compliance issues like safety checks and a lot of paperwork can start flying around.
However, keeping on top of things isn’t very difficult and using software is a must if you want to make things as fuss-free as possible.
This blog was first published in July 2022 and has been updated for relevance.
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