Compliance
Making Tax Digital for Income Tax Self Assessment: What UK Property Owners & Traders Need to Know
A new threshold brought in under the Spring Statement 2025 will change digital filing for many UK landlords and traders—key facts, timelines, and compliance strategies.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What is MTD for Income Tax Self Assessment?
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is the UK’s move to digital-only tax filing for individuals with trading or property income. Under this system, taxpayers must use compatible software to report income and expenses more regularly and avoid paper-based returns. It’s part of HMRC’s broad push for digital transformation. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
### Key Policy Details
- Individuals with **trading or property income over £20,000** will be required to comply with MTD for ITSA. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
- Some taxpayers will be **exempt or deferred**, including certain groups HMRC designates. Details on who qualifies for exemption or deferral are expected in follow-up guidance. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
- The measure will include **single filing channel** so that reporting obligations are consolidated into software-based submissions. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
- **Effective date**: 6 April 2028. This gives enough lead-time to transition. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
### Who is Affected—and Who Isn’t
| Included | Exempted / Deferred Groups* |
|---|---|
| Individuals earning trading or property income above £20,000 annually | Small income earners below £20,000 threshold; perhaps certain categories of taxpayers (e.g. non-residents, trusts) as per guidance ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai)) |
*Note: HMRC has not yet published a full list. Stay tuned for clarifications.
### Practical Steps to Comply & Prepare
1. **Use compatible software**: Identify and begin using software that meets HMRC’s technical standards. Many providers are already in the market.
2. **Organize record-keeping**: Properly detail trading and property income, expenses, and deductions in digital-friendly formats.
3. **Assess current income levels**: If you’re close to the £20,000 threshold, forecast income and decide whether to prepare now.
4. **Monitor HMRC guidance**: HMRC will publish guidance on exemptions and deferrals—bookmark their site or subscribe to alerts.
5. **Plan for cash flow**: Digital reporting may require more frequent updates—be ready for quarterly or monthly submissions depending on how the rules develop.
### Example Scenarios
- **Landlord** with rental income of £25,000 per year and no other property or trading income: will be under MTD for ITSA from April 2028; needs digital submission software and organized statements now.
- **Part-time trader** earning £15,000: currently exempt but should track income carefully—if earnings increase beyond threshold in future, they’ll need to adapt.
### Strategic Value & Benefits
- Reduces errors, improves timeliness, may minimize late-filing penalties.
- Enhances planning with clearer real-time insights into cash flow.
- Opens doors to possible tax-saving software features: automatic deduction capture, real-time categorization.
### Potential Pitfalls & How to Avoid Them
- Missing deadlines or using incompatible software—always confirm your provider is HMRC-recognized.
- Poor documentation (e.g. non-digital receipts or untracked expenses).
- Underestimating costs of transitioning—software subscriptions, training or hiring support.
### Conclusion
If you’re a UK property owner or trader with incomes over £20,000, MTD for ITSA is set to transform how you report tax from April 2028. Starting early—choosing software, organizing records, monitoring guidance—will ease the transition and guard against surprises.
*Note: HMRC will publish more detailed rules regarding exemptions, deferral, and compliance expected both in the lead-up to and after the implementation date.*