Tax Planning
Making Tax Digital for Income Tax: What Sole Traders and Landlords Must Know Starting April 6, 2026
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must use digital software to submit quarterly updates—this is part of HMRC’s phased rollout of Making Tax Digital for Income Tax.
By NomadicTax Research Team • 5-8 min read • June 17, 2026
## Overview of the Change
Starting 6 April 2026, **sole traders and landlords** with *qualifying gross income over £50,000* from self-employment and property must adopt HMRC’s Making Tax Digital (MTD) for Income Tax. This requires using recognised software to keep **digital records** and send **quarterly summaries** of income and expenses. The traditional Self Assessment tax return still applies year-end, with the deadline for 2026-27 returns being 31 January 2028. ([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))
## Phased Thresholds and Timeline
| Tax Year | Qualifying Income Threshold | MTD Start Date |
|---|---|---|
| 2024-25 | Over **£50,000** | 6 April 2026 |
| 2025-26 | Over **£30,000** | 6 April 2027 |
| 2026-27 | Over **£20,000** | 6 April 2028 |
This phased approach aims to give smaller businesses and landlords more time to make the transition. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
## Practical Implications & Examples
- **Software**: Use of MTD-compatible software is mandatory. Whether you are submitting quarterly updates or final returns, software will be the method of communication. Keeping digital records of both income and expense items is essential. ([gov.uk](https://www.gov.uk/guidance/get-ready-for-mtd-an-agent-toolkit/understanding-making-tax-digital-for-income-tax?utm_source=openai))
- **Penalty Relief Year**: For the 2026-27 tax year, HMRC will not issue **penalty points** for late quarterly updates. After that, penalty points will start, and eventually, a £200 fixed penalty will apply once four points are reached. ([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))
- **Example**: Jane, a landlord with gross property income of £55,000 and a small side-business, must from April 2026 keep digital books and send quarterly summaries. She must still file her Self Assessment return in January 2028, but much of the data will already be captured via software.
## Actionable Steps
1. **Assess your qualifying income** for past years to determine when MTD will affect you.
2. **Choose compatible software**—ensure it is recognised by HMRC and can handle digital record keeping, quarterly summaries, and link to tax codes etc.
3. **Keep accurate digital records** from day one—gross income and expense entries, receipts, invoices.
4. **Plan for transition costs**—software subscriptions, training or accounting fees.
5. **Communicate with your tax agent** if applicable so they can help set up systems and ensure compliance.
## Benefits and Key Considerations
- **Benefits**: smoother tax reporting, reduced errors, spread-out administrative load, better financial visibility throughout the year.
- **Considerations**: potential costs of software; for those near thresholds, keep an eye on income to avoid unforeseen obligations; prepare for penalties post the grace period.
This change represents one of the biggest shifts to the UK Self Assessment regime in decades. Proper preparation will make the transition manageable and ensure compliance without stress.