Compliance
Making Tax Digital for Income Tax: What Landlords & Sole Traders Must Know
From 6 April 2026 new digital reporting rules begin for UK landlords and sole traders. This article explains what qualifies, key dates, and how to stay compliant.
By NomadicTax Research Team • 5-8 min read • May 1, 2026
## What is “Making Tax Digital for Income Tax” (MTD ITSA)?
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is a modernisation initiative by HMRC. Under MTD ITSA, landlords and sole traders in the UK must keep digital records and submit quarterly updates to HMRC via compatible software. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
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## Who’s affected and when
| Qualifying income bracket | Starting date |
|---------------------------|----------------|
| Gross income over £50,000 (from self-employment and/or property) | **From 6 April 2026** ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai)) |
| £30,000–£50,000 | From **6 April 2027** ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai)) |
| £20,000–£30,000 | From **6 April 2028** ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai)) |
These thresholds include **gross income before any expenses or allowances**. Using your most recent Self Assessment makes determining this simpler. ([gov.uk](https://www.gov.uk/government/statistics/making-tax-digital-for-income-tax-business-population-statistics/making-tax-digital-for-income-tax-business-population-statistics-commentary?utm_source=openai))
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## Actionable steps to prepare
- Adopt-and test out MTD-compatible software now. Many leading providers offer tools tailored for landlords and sole traders. Ensure software tracks gross income, expenses, and supports quarterly updates.
- Keep **digital records** throughout the year—not just when preparing returns. Quarterly updates mean earlier visibility of income patterns and tax liabilities.
- HMRC will send letters to those identified to join from 6 April 2026. Use that notice and historic return data to project your compliance obligations. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
- Review if an exemption or deferral applies (e.g. partnerships are excluded from MTD for ITSA). ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
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## Compliance risks & benefits
**Risks if you don’t comply:**
- Penalties or “penalty points” for late or missing quarterly updates (once penalty point thresholds are hit) ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai)).
- Audit risk is higher if you maintain poor records or miss update deadlines.
**Possible benefits:**
- Smoother cash flow management by identifying tax liabilities quarterly rather than chasing retrospective surprises.
- Better insights into business profitability and expense management throughout the year.
- Reduced year-end stress when submitting Self Assessment returns.
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## Example scenario
**Jane is a landlord:**
- Gross rental income: £55,000/year; expenses: £20,000.
- As gross income exceeds £50,000, Jane must start MTD ITSA from 6 April 2026.
- She buys a software package, tracks monthly expenses digitally, submits quarterly summaries.
- She misses one update: gets a penalty point. But since this is her first miss, no financial penalty yet—just warning.
**Paul is a sole trader with gross income of £40,000:**
- No requirement yet for MTD ITSA since threshold is £50,000.
- But from 6 April 2027, he will need to comply since his gross income lies in £30,000-£50,000 band.
- If Paul begins tracking digital records now, he’ll save time and avoid scrambling later.
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## Final thoughts
If you're a landlord or sole trader with qualifying income over £50,000, the countdown is on: from **6 April 2026** you’ll need to switch to digital record-keeping and quarterly updates. Those in lower income brackets will follow over the next two years. Begin early with software, organise your records and get ahead of the compliance curve.