The way many of us manage our finances is set for a significant update. Making Tax Digital (MTD) for Income Tax is a mandatory change from HMRC that could require you to change how you record and report your earnings. While the first deadline is 6 April 2026, understanding how this impacts your record-keeping now could be a major advantage when it comes to your future mortgage plans.
At Yes Mortgage Services Limited, we provide advice from a comprehensive panel of lenders. While we are not tax advisers, we know that clear, digital records are often the key to a smoother, faster mortgage application.
What is changing?
From 6 April 2026, MTD for Income Tax becomes mandatory for sole traders and landlords with a qualifying income over £50,000.
According to HMRC, these requirements are then scheduled to expand:
- 6 April 2027: Those with qualifying income over £30,000.
- 6 April 2028: Those with qualifying income over £20,000.
What is “Qualifying Income”?
To help your clients understand if they fall within the new thresholds, you could add this section to your blog:
What counts as “qualifying income”?
It is important to note that HMRC[1] bases these thresholds on your gross qualifying income, not your profit. This means the total amount of money you receive from self-employment or rent before you deduct any expenses, business costs, or personal tax allowances.
Your qualifying income is the combined total of:
- Gross turnover from all your sole trader businesses.
- Gross rental income from UK and overseas property.
For example, if you have £45,000 in self-employed turnover and £10,000 in rental income, your total qualifying income would be £55,000. Even if your expenses bring your actual profit down significantly, you could still be required to follow the MTD rules because your gross income exceeds the £50,000 threshold.
Please note that income from a PAYE job, dividends, or pensions does not count towards this specific “qualifying income” total for MTD purposes.
What does this mean in practice?
If you currently complete a Self-Assessment tax return, these changes could mean moving away from annual paper-based filing. Instead, you would need to:
- Keep digital records of your income and expenses.
- Use compatible software to manage your accounts.
- Send quarterly updates to HMRC to provide a more real-time view of your tax position.
Who should be aware of this?
This won’t affect everyone immediately. However, it is worth keeping on your radar if you are self-employed, receive income from a rental property, or expect your income to reach these thresholds in the coming years.
While your mortgage adviser cannot provide specific tax-planning advice, we can help you understand how your documented income aligns with lender requirements.
Could it affect a mortgage application?
From a mortgage perspective, MTD does not change a lender’s underlying criteria or “underwriting rules.” However, it could have a positive side effect for applicants.
For self-employed individuals and landlords, having clearer, digital, and more up-to-date records could make it much easier to organise your income information. When you are ready to apply for a mortgage, having your documents neatly prepared and readily available often leads to a faster and less stressful process.
What should you do next?
The most important thing is not to worry, but to be prepared. If you think Making Tax Digital could apply to you, we recommend taking the following steps:
- Check the latest guidance: Visit the official GOV.UK pages to see exactly how the timelines affect you.
- Speak to a professional: Consult with your accountant or tax adviser to discuss which software might be best for your business or property portfolio.
- Organise your paperwork: If you are planning a mortgage application soon, staying organised now will help support a smoother journey later.
References: GOV.UK (2026). Get ready for Making Tax Digital for Income Tax – when to start. [online] Available at: https://makingtaxdigital.campaign.gov.uk/get-ready-for-making-tax-digital/ [Accessed 24 Mar. 2026].
We do not charge a fee for mortgage advice. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
The FCA does not regulate some forms of Buy to Lets.
Please be aware that by clicking on to any of the above links you are leaving our website. Please note that neither we nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics, and images, does not, and is not intended to, substitute professional financial advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.
[1] Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
At Yes Mortgage Services, we offer a comprehensive range of products from across the market.
Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.
Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.
