If you are a sole trader, freelancer, or landlord in the Cardiff or Newport area, there is a significant tax change that is already in effect — and if you have not yet taken action, now is the time.
HMRC's Making Tax Digital (MTD) for Income Tax officially launched in April 2026. This is the biggest change to how self-employed people and landlords report their income to HMRC in over a decade — and it affects thousands of people right here in South Wales.
What Is Making Tax Digital?
Making Tax Digital is HMRC's programme to move the UK tax system online. Instead of filing one large Self Assessment tax return every January, qualifying taxpayers report income and expenses digitally every quarter throughout the year.
MTD for VAT has already been in place since 2019. HMRC is now extending the same approach to Income Tax, targeting the self-employed and landlords first.
Who Does MTD Affect — And When?
April 2026
Sole traders and landlords with combined gross income over £50,000 are required to use MTD-compatible software and file quarterly updates.
April 2027
The threshold drops to £30,000, bringing more self-employed people and landlords into the system.
April 2028
The threshold drops further to £20,000, covering the majority of sole traders and landlords.
What Changes Under MTD?
Digital record keeping
You must keep digital records of business income and expenses throughout the year using compatible software.
Quarterly updates
You submit four quarterly summaries to HMRC each tax year instead of waiting until one annual return.
Final declaration
After quarterly updates, you still complete a final declaration to confirm reliefs, adjustments and final tax liability.
Quarterly submission dates
- 7 August — quarter ending 5 July
- 7 November — quarter ending 5 October
- 7 February — quarter ending 5 January
- 7 May — quarter ending 5 April
Penalties for Non-Compliance
HMRC is introducing a points-based penalty system. Each missed quarterly update earns one penalty point. When four points are reached within a two-year period, a £200 financial penalty is triggered. Late payment penalties apply separately.
What Software Do You Need?
You must use HMRC-approved MTD-compatible software. Popular options include Xero, QuickBooks, FreeAgent and Sage. Zara Accountants can help choose the right system, set it up and handle quarterly submissions.
What Should Cardiff & Newport Businesses Do Right Now?
- Check your 2024/25 income and whether you are in scope.
- Choose and set up MTD-compatible software.
- Register for MTD Income Tax with HMRC.
- Start keeping digital records from the beginning of the 2026/27 tax year.
- Plan your quarterly submission dates.
If you are unsure about any of these steps, Zara Accountants can help. We serve sole traders, landlords and small businesses across Cardiff, Newport and South Wales.
Need help with Making Tax Digital?
Book a free 30-minute consultation with Zara Accountants.
Book free consultationhello@zaraaccountants.co.uk