Compliance
Compliance Simplified: Preparing for Making Tax Digital for Income Tax Self Assessment
From April 2026, new digital obligations kick in for self-employed individuals and landlords with qualifying income. Our guide walks you through preparing, understanding thresholds, and ensuring compliance.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## Overview of MTD for Income Tax (ITSA)
- **Who is affected first**: From **6 April 2026**, self-employed individuals and landlords with qualifying income over **£50,000** will be required to use Making Tax Digital for Income Tax (MTD-ITSA). ([gov.uk](https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords?utm_source=openai))
- **Phase 2**: From **6 April 2027**, the requirement lowers to those with qualifying income over **£30,000**. Later, for tax year 2028-29, the threshold will drop to **£20,000**. ([gov.uk](https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords?utm_source=openai))
- **Qualifying income** means gross self-employment and property income before deductions. Only unincorporated businesses and landlords (sole traders etc.). Partnerships are not yet mandated. ([gov.uk](https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords?utm_source=openai))
## Key Compliance Steps
1. **Select compatible software early** – you’ll need digital record-keeping and ability to submit quarterly updates.
2. **Maintain accurate digital records** of all income & expenses (including property income), beginning now in preparation. Late adoption leads to risk of error.
3. **Understand Quarterly Updates** – instead of one annual Self Assessment, you’ll send four updates per year as well as annual final declaration. Deadlines align with **VAT schedule** (7th of the month following quarter end for many). ([developer.service.hmrc.gov.uk](https://developer.service.hmrc.gov.uk/roadmaps/mtd-itsa-vendors-roadmap/apis.html?utm_source=openai))
4. **Review exemptions or digital exclusion status** if relevant – guidance updated to clarify who qualifies for digital exclusion. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
5. **Budget for administrative burden** – some cost and time investment up front; but benefits include fewer errors, more predictive tax payments. Costs vs savings estimated in published analysis. ([gov.uk](https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords?utm_source=openai))
## Practical Scenario
*Ben*, a landlord in Manchester with **£55,000** gross rental income and £10,000 from a small online business (self-employed), reaches qualifying income threshold in 2026. He must:
- Register or ensure his software is MTD-compliant by April 2026.
- Keep digital records of income & expenses for both property and trade.
- Submit quarterly income and expense updates (likely four times a year) plus a final annual declaration via software.
Failing to do so risks penalties, errors in calculation, loss of time.
## Actionable Advice
- **Trial software now** ahead of legislated mandation—take early advantage of optional use to avoid scramble.
- **Train staff or yourself** to understand software entries, depreciation, expenses, shared costs (often tricky with property).
- **Retain all receipts digitally** and ensure reliable backup.
- **Review your tax planning under the non-dom changes** alongside MTD; foreign income may need disclosures via MTD. “Qualifying income” currently excludes foreign income, but rules may evolve. ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai))
MTD-ITSA will become a cornerstone of compliance in the UK tax landscape. Being proactive will reduce risk and make the transition significantly smoother.