Making Tax Digital for Income Tax works business by business. Each sole trade has its own digital records and its own quarterly update, all UK lettings together form one UK property business with one update, and all overseas lettings form one foreign property business. The qualifying income test, the update deadlines, the penalty point for a missed deadline and the end of year tax return are shared across all of them.

What counts as a separate business for MTD?

Regulation 9(1) of the Income Tax (Digital Obligations) Regulations 2026 requires a quarterly update in relation to each relevant activity of the person, for each update period. HMRC’s guidance turns that into three kinds of business:

  • Each sole trade. HMRC’s example is someone who is both an electrician and a driving instructor: one set of digital records and separate quarterly updates for each.
  • The UK property business. All UK lettings, including your share of jointly let property, are legally one business. HMRC says this includes UK furnished holiday lettings income from April 2025. Separate records per property are not needed.
  • The foreign property business. All overseas lettings are one business. A separate digital record is kept for each overseas property, and the software combines them into one update.

A share of profit from a partnership is not one of these businesses. No digital records or quarterly updates are needed for it, although it still goes on the tax return. See our page on MTD and partnerships.

How many quarterly updates will I send?

One per business per update period. The deadlines are the same for every business: 7 August, 7 November, 7 February and 7 May after the tax year. Each update shows the cumulative total from the start of the tax year to the end of the period, so a correction to one business simply flows into that business’s next update. HMRC says an update must still be sent for a period in which a business had no income or expenses, which catches seasonal trades. Regulation 9(2) allows an update to be sent up to 10 days before the end of a period if you reasonably believe it is complete.

Businesses Updates per quarter Updates per year
One trade 1 4
One trade and UK lettings 2 8
Two trades, UK lettings and an overseas let 4 16

What goes into each update is covered on our page on what goes in an MTD quarterly update.

Does each business have to be signed up and run in the same software?

HMRC updated its sign up guidance in August 2024 to confirm that each income source has to be signed up where there are several. You may use different compatible software for different income sources, but where more than one product is used the records must be joined by digital links. Some firms also split the work, with one agent keeping one business’s records; our page on main and supporting agents explains what each can do.

How does the threshold work across several businesses?

Qualifying income is the total gross income, before expenses, from all self employment and property sources on the return. HMRC’s example adds £25,000 of rent and £27,000 of self employment income to give £52,000. A source that has ceased since the last return still counts if you have another continuing self employment or property source. Several small businesses can therefore bring someone into MTD even though none of them would on its own. Our page on qualifying income covers the rules in full.

The lighter record keeping option works the other way, source by source. Where a self employment or UK property source has turnover below the VAT registration threshold, given by HMRC as £90,000, its records can be categorised simply as income or expense. HMRC says that with more than one source, each source must be below the threshold to use the simpler categories for it, so a large trade and a small one may be recorded differently.

What happens when one business starts or stops?

A new business. If you are already in MTD and start a new trade, or a new property business, you add it in your HMRC online account and give its start date. Digital records and quarterly updates for it only start after you have submitted a tax return that includes it for the first time. HMRC’s example is a source started on 1 July 2026: it goes on the 2026 to 2027 return due by 31 January 2028, and updates for it begin from 6 April 2028. You can choose to report it in MTD from the start instead. Letting another UK property is not a new source, because it joins the existing UK property business, and its records start when rent first comes in. Our page on MTD for a new business covers the timing in detail.

A business that stops. Regulation 6 requires you to tell HMRC of the cessation date no later than the update deadline for the period in which it falls. HMRC’s example is a source that ceases in May 2026: the update due by 7 August 2026 is sent and no more updates are needed for it, but the continuing businesses carry on as before. Stopping letting one UK property while others continue is not a cessation, so there is nothing to report.

How do penalty points work with several updates?

HMRC will not give points for late quarterly updates for 2026 to 2027. For later years, each missed deadline earns a point and a £200 penalty is charged on reaching four points. HMRC’s penalty guidance says you can only get one point per deadline, even if you have more than one business and send more than one update late. Our page on MTD penalty points explains how points expire.

How do allowances work across businesses?

The £1,000 trading allowance covers gross trading income from one or more trades, so it is one allowance in total, not one per trade. The £1,000 property allowance works the same way across property businesses. Someone with both trading and property income gets £1,000 of each. HMRC adds that if you have two property businesses and claim the property allowance in one, you may not claim actual expenses in the other. For capital allowances, a sole trader with more than one trade usually gets an annual investment allowance for each, unless the businesses are controlled by the same person and share premises or have similar activities.

How might this look in practice?

Illustration only. Leah, already within MTD, is an electrician with turnover of £95,000, sells crafts online with turnover of £12,000, lets two flats in the UK and owns an apartment in Spain that she lets. She sends four updates each quarter: one for each trade, one for the UK property business and one for the foreign property business. The electrical trade is above £90,000, so its records use the full categories, while the craft business can use income and expense only.

In August 2028 she sells the Spanish apartment. She tells HMRC of the cessation by 7 November 2028, sends the update for that period and stops sending foreign property updates. If she missed the 7 February deadline for all three remaining businesses, she would receive one penalty point, not three.

What mistakes come up most often?

  • Keeping two trades in one set of records.
  • Treating each rental property as a separate business.
  • Skipping a nil update for a seasonal business.
  • Missing the deadline for reporting that a business has ceased.
  • Claiming a £1,000 trading allowance against each trade.
  • Claiming the property allowance in one property business and actual expenses in the other.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.