What’s changing?
From 6 April 2026, anyone in the UK who is a sole trader or landlord and has qualifying income over £50,000 from self-employment or rental property must comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). This means:
- Keeping digital records of income and expenses;
- Submitting quarterly updates using HMRC-approved software;
- Filing an annual Self Assessment return as usual, but with data already supplied via quarterly updates. (gov.uk)
After that, thresholds drop: in April 2027, income over £30,000 will be subject to the same rules, and from April 2028 that threshold falls further to £20,000. (gov.uk)
What needs doing now
1. Determine qualifying income: Examine your records for self-employment and property income from the 2024-25 tax year. If it’s over £50,000, these rules apply. Even below the threshold, you can opt in voluntarily. (gov.uk)
2. Choose compatible software: HMRC does not provide its own software; you will need commercial or third-party tools that connect to HMRC digitally. Test the software ahead of time to avoid surprises. (gov.uk)
3. Make signup and practice routine: HMRC is urging those affected to sign up early. You can simulate the process, understand report dates, and get used to the workflow before April. (assets.publishing.service.gov.uk)
Example scenario
| Person | Self-employment income | Rental income | Total qualifying income | When MTD applies |
|---|---|---|---|---|
| Alice | £30,000 | £25,000 | £55,000 | From 6 April 2026 |
| Bob | £20,000 | £5,000 | £25,000 | Voluntary in April 2026; mandatory from April 2027 (if total > £30,000) |
| Clara | £15,000 | £3,000 | £18,000 | Will be mandatory from April 2028 (when threshold drops to £20,000); can join earlier voluntarily |
Penalties and transitional rules
- For those joining in April 2026 (>£50,000 income), no penalty points will be applied for late quarterly updates during the first 12 months. (gov.uk)
- If you miss deadlines, HMRC will use a penalty-points regime: after accumulating a certain number of points, fixed penalties are applied. (gov.uk)
Action checklist
- Calculate your income from self-employment & property for 2024-25 tax year.
- If it totals over £50,000, plan for the MTD obligations from April 2026.
- Select digital record software that meets HMRC compatibility requirements.
- Begin keeping records in digital form ahead of deadlines.
- Register early and engage with agents or software providers.
Why this matters: The goal is to simplify tax reporting, reduce errors and improve cash flow. But being unprepared can lead to stress, fines, and rushed last-minute compliance.
Final word: even if you aren’t yet required to use MTD, starting early gives you time to adapt—and staying ahead of changes will always be easier than catching up.