Digital Nomad
How UK Making Tax Digital (MTD) Expansion Affects Sole Traders & Landlords from April 2026
Sole traders and landlords earning over £50,000 must shift to digital reporting. These changes involve quarterly updates and new software—and starting now helps avoid penalties later.
By NomadicTax Research Team • 5-8 min read • March 7, 2026
## 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](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))
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](https://www.gov.uk/government/publications/modernising-the-tax-system-through-making-tax-digital/technical-note-modernising-the-tax-system-through-making-tax-digital?utm_source=openai))
## 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](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
**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](https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step?utm_source=openai))
**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](https://assets.publishing.service.gov.uk/media/6751cbcf2086e98fae3511b2/MTD_Agent_Toolkit.pdf?utm_source=openai))
## 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](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
- If you miss deadlines, HMRC will use a **penalty-points regime**: after accumulating a certain number of points, fixed penalties are applied. ([gov.uk](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
## 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.