Compliance
Making Tax Digital Goes Live: What Sole Traders and Landlords Need to Do Now
From 6 April 2026, many sole traders and landlords with qualifying income over £50,000 must use Making Tax Digital for Income Tax — here’s what that means and how to prepare.
By NomadicTax Research Team • 5-7 min read • May 14, 2026
## What is **Making Tax Digital for Income Tax (MTD for ITSA)?
Making Tax Digital for Income Tax (often called MTD for ITSA) is HMRC’s modernisation initiative, which from **6 April 2026** requires sole traders and landlords with gross income over **£50,000** to keep digital records and submit **quarterly updates** of income and expenses, followed by an end-of-year finalisation rather than the traditional annual self-assessment alone. ([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))
In the following years, the qualifying income thresholds will decline: to **£30,000** from April 2027, and **£20,000** from April 2028. ([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))
## Who is in scope
- Sole traders and landlords with **business and/or property income** over the threshold. ([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))
- Income is “gross income” before deductions. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
- There are exemptions, e.g. if you’re “digitally excluded” (such as lack of access to appropriate technology). *Partnerships* will also be included in a future phase. ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai))
## What you need to do to comply
1. **Choose compliant software**: digital record-keeping requires software that is approved by HMRC.
2. **Start quarterly filings**: gather your income and expenses every quarter, report them regularly to HMRC. End-of-year submission still needed. ([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
3. **Check exemptions**: some individuals may be exempt from certain requirements; check eligibility. ([gov.uk](https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax?utm_source=openai))
4. **Start early**: sign up and start piloting or testing the new processes to avoid penalties. Penalties are expected for non-compliance once in full operation. ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
## Actionable insights
- **Review current record-keeping systems**: If you're still keeping paper records or using spreadsheets, upgrade to approved software before April.
- **Budget for software costs**: There may be subscription or licence fees; include in your cashflow projections.
- **Organise your bookkeeping**: quarterly updates mean you’re never more than a few months behind; keep invoices, receipts, property statements, etc. ready.
- **Talk to your accountant or agent**: if you work with a professional, ensure they’re aware of MTD deadlines and capable of managing digital submissions.
- **Understand penalties**: late quarterly updates likely incur penalties. Ensure compliance to avoid unnecessary costs.
## Case example
Suppose Sarah is a landlord with gross rental income of £60,000 per year (before expenses). From 6 April 2026, she must use software to keep digital records and will need to report income and expenses every quarter (e.g. April–June, July–September, etc.), and finally submit the full return for the year ending 5 April through HMRC’s system. If she fails to report a quarter by the deadline, she may be penalised.
## Bottom line
MTD for ITSA represents a shift towards more frequent interaction with HMRC, greater administrative discipline, but also benefits such as smoother cashflow visibility and fewer last-minute scrambling at tax time. If you’re affected, **don’t wait**—get your systems in place now so you’re ready for April 6, 2026.