What’s New?
Starting 6 April 2026, Making Tax Digital for Income Tax (MTD ITSA) becomes law for unincorporated businesses and landlords with qualifying income over £50,000. You’ll need to:
- Keep digital records using MTD-compatible software.
- Send quarterly summaries of income and expenses to HMRC.
- File your annual Self Assessment tax return as usual, but prep will be easier with regular quarterly updates.(gov.uk)
From 6 April 2027, the income threshold drops to £30,000, then £20,000 in 2028.(gov.uk)
Who’s in Scope—and Who’s Exempt?
- In scope: Sole traders and landlords with combined gross income from self-employment and property above the thresholds.(gov.uk)
- Exemptions for certain groups include those who are digitally excluded, ministers of religion, Lloyd’s underwriters, people with power of attorney, etc.(legislation.gov.uk)
What You’ll Need to Do Immediately
| Task | Action Points |
|---|---|
| Choose Software | Pick MTD-compatible tools. Compare providers; test demo versions. |
| Sign Up | If you meet the threshold, sign up through HMRC before your first quarterly update is due. |
| Update Records | Digitally organise your income, expense and property records; align bookkeeping software. |
| Learn Calendar | Know the quarterly dates and the final Self Assessment deadline: 31 January. |
Benefits & Common Challenges
Benefits:
- Smoother cash-flow planning with frequent updates.
- Fewer surprises at tax return time.
- Better record-keeping habits, fewer missing deductions.
Challenges:
- Cost and learning curve for software.
- Staying compliant with frequent deadlines.
- Ensuring data accuracy with rounding errors or categories.
- Dealing with joint ownership of property or mixed income sources.(gov.uk)
Real-World Example
Sarah is a landlord with two properties and a small online shop. In 2025-26, she earns £55,000 from rentals and £10,000 from her shop. She must use MTD from April 2026. She purchases MTD software, uploads her rental income data and expenses, and sends quarterly updates. At year end, when she files her Self Assessment, much of the work is already done.
John, on the other hand, earns £45,000 from rentals and £10,000 from his self-employment. He falls below the £50,000 threshold in 2026, so he’s exempt until April 2027. But using the year now to prepare helps.
Action Plan for Sole Traders & Landlords
- Audit your incomes for 2024-25 and 2025-26 to see whether you exceed thresholds.
- Review digital accounting software options early.
- Read HMRC guidance or agent toolkits; join webinars or free sessions.
- Set reminders for deadlines: quarterly update dates and 31 January for Self Assessment.
- If exempt now, still track your records digitally—so you’re ready when the time comes.
Key Resources
- HMRC agent toolkit for MTD for Income Tax (gov.uk)
- Explanatory Memorandum on the Digital Obligations Regulations 2026 (legislation.gov.uk)
- Making Tax Digital quarterly update direction (gov.uk)