Making Tax Digital (MTD) is HMRC’s move toward a fully digital tax system, including the introduction of quarterly updates to be submitted through approved software like Xero. From April 2026, MTD for Income Tax Self-Assessment will apply to anyone earning over £50,000 from self‑employment or property income.
To help you get started, we’ve answered some of the most common MTD questions below:
Q: Will any bank account work with Xero?
A: Xero’s bank feeds work with most major and high street banks, though a small number of less common providers don’t offer this integration. It’s always best to check if you are unsure
Q: I’m a sole trader and a landlord: should I open a business bank account if I’m going to use Xero?
A: Everyone’s situation is a little different, but in general, having a separate business bank account is helpful for sole traders. It keeps your business income and expenses in one place, making it far easier to track what’s coming in and going out.
Q: Does a holiday let count as property income for MTD?
A: Yes, the previous furnished holiday let rules ended on 6 April 2025: holiday let income is now treated as standard property income. If your earnings exceed the MTD threshold, you will have to make the transition to digital.
Q: My letting agent uses Xero for my rental income, can they submit my quarterly MTD updates?
A: No. Only you or an authorised tax agent can file MTD submissions. Your letting agent can keep your records organised, and we can use their data to handle the submissions on your behalf.
Q: Is it a problem if my rental income goes into my personal bank account?
A: No, you can continue using your personal account as long as you keep clear, accurate digital records that match your rental income and expenses.
Q: What will it cost if I need support with MTD?
A: We offer three levels of support depending on how hands-on you want to be:
- Do it for me
- Do it alone
- Do it with me
Each option comes with different pricing and levels of training. One of our Making Tax Digital specialists can talk you through the best fit for your needs.
Making Tax Digital brings a lot of change, and naturally, plenty of questions. Whether you’re a sole trader, a landlord, or juggling both, getting clear on what MTD means for you will make the transition far smoother.
