Overview
The UK government is rolling out Making Tax Digital (MTD) for Income Tax in phases. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 from self-employment and property will be required to use MTD-compatible software, maintain digital records, send quarterly updates, and submit returns digitally. (gov.uk)
If your income from self-employment and/or property is above £30,000, the requirement kicks in from 6 April 2027; and for those with income over £20,000, from 6 April 2028. (gov.uk)
Who is in Scope?
- Must be registered for Self Assessment
- Receive income from self-employment or property (or both) — qualifying income is gross income before expenses or deductions (gov.uk)
- Exclusions/exemptions include individuals who are digitally excluded, or where partnerships profit shares are involved (profit share does not count towards the qualifying income threshold) (gov.uk)
What You’ll Be Required to Do
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Use recognised digital software to:
- Create and keep digital business records of income & expenses
- Send quarterly summaries of trading/property income and expenses to HMRC
- Submit a final Self Assessment return by 31 January following the end of the tax year using that software (gov.uk)
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Ensure your software is connected to HMRC via your agent or personally; undergo any required identity checks and authorisations. (gov.uk)
Action Steps: How to Get Ready
- Calculate your qualifying income for the most recent tax year to see whether you exceed the threshold.
- Choose compliant software that handles digital record-keeping, quarterly updates, and final return submissions.
- Start maintaining digital records now—even if not yet required—to reduce transition risks.
- Sign up for HMRC’s trial/testing scheme to familiarise yourself with the new processes. (gov.uk)
- Speak to your accountant or tax adviser for specific impacts on cashflow, tax payments, and record-keeping habits.
Examples
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Alice, a landlord earning £55,000 in gross rental income and also £10,000 self-employed income: from April 2026 must start using MTD. She needs digital software, quarterly updates and a final return digitally.
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Ben, a sole trader earning £35,000: requirement comes April 2027, so he has time; but early adoption will help with cash flow forecasts and familiarisation.
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Cara, whose property income is £5,000 and self-employment income £15,000: she will only be in scope in tax years starting April 2028 if thresholds lowered to £20,000. For now, optional adoption.
Risks & Benefits
Benefits:
- More accurate reporting and fewer surprises at year-end
- More timely tax liabilities spread over the year via quarterly updates
- Easier compliance, if systems are in place early
Risks:
- Cash flow challenges if tax payments are earlier than expected
- Cost of software and potential training/time investment
- Need for strong record-keeping discipline
Bottom Line
Make sure you check your qualifying income soon, choose compliant software, and begin digital record-keeping before your deadline. Whether you're in the 2026, 2027, or 2028 phase, getting ahead now can save time, reduce errors, and avoid last-minute stress.