Compliance
Navigating Making Tax Digital for ITSA: What Sole Traders and Landlords Need to Know from April 2026
From April 2026, HMRC’s Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) rule mandates digital quarterly reporting for sole traders and landlords with qualifying income over £50,000—understanding this change now can save you compliance headaches later.
By NomadicTax Research Team • 5-8 min read • April 19, 2026
## What is MTD for ITSA?
MTD for ITSA is HMRC’s initiative to require digital record-keeping and quarterly reporting of income and expenses for certain self-employed individuals and landlords. It’s part of a broader effort to modernise the tax system and reduce tax errors. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-programme-accounting-officer-assessment-updated/making-tax-digital-programme-accounting-officers-assessment-summary-updated?utm_source=openai))
## Who is in scope and when it begins
- From **6 April 2026**, individuals with **qualifying trading or property income over £50,000** will be required to comply. ([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))
- From **6 April 2027**, the income threshold reduces to **£30,000**. ([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))
- A further expansion is planned: from **6 April 2028**, those with income over **£20,000** will also be brought in. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai))
## Key requirements under MTD for ITSA
- Keep **digital records** of all relevant income and expenses using HMRC-approved software. ([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))
- Submit **quarterly updates** that report cumulative income, expenses, and reliefs. These are not full tax returns but interim information. ([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))
- Then continue submitting the end-of-year Self Assessment return through compatible software. ([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))
## What this means for you (if applicable)
- **Compliance burden**: You’ll need software that supports quarterly submissions; manual or paper-based systems will no longer suffice. Small businesses might face transitional costs. ([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))
- **Penalties**: During the testing phase, late quarterly updates won’t trigger penalty points—but end-of-year late returns will. Once mandated, penalties for late submissions and updates will apply. ([gov.uk](https://www.gov.uk/government/publications/edition-2-ready-steady-file/edition-2-ready-steady-file?utm_source=openai))
- **Budgeting and cash flow**: With more frequent reporting, you’ll be more aware of tax liability throughout the year; better planning becomes essential.
## What you should do now (actionable steps)
1. **Assess your income streams** for the last 12 months to see if your qualifying income exceeds £50,000.
2. **Plan for software**: research and choose HMRC-approved software that supports MTD ITSA (digital records, quarterly updates, returns).
3. **Start keeping digital records** even before mandated, so your systems are ready by April 2026.
4. **Talk to your accountant or tax adviser** about how MTD ITSA affects your reliefs, allowable expenses, and tax planning.
5. **Budget for costs**, both financial (software, bookkeeping) and time (record-keeping, backlog if digitizing old records).
## Example scenario
Sarah is a self-employed graphic designer with property rental income. Combined gross income (before expenses) from business and property over the last year is **£55,000**. From 6 April 2026, she’ll need to:
- Keep digital records of her design business and rental properties.
- Submit quarterly updates (not full Self Assessment until year-end) via compatible software.
- Prepare her tax planning with more frequent insights into liabilities.
If instead her self-employment + rental income were £45,000, she’d have until April 2027 to become obliged under MTD ITSA. But voluntarily joining early may bring benefits.
## Benefits & challenges
| Benefit | Challenge |
|---|---|
| More accurate tax forecasting and less surprise liabilities | Upfront cost of software and adapting to new processes |
| Reduced error and simpler digital record-keeping | Learning curve and potential administrative burden for smaller operators |
| Better integration with accounting tools and advisers | Need for consistent record-keeping across all streams |
**Bottom line:** If you're a sole trader or landlord with income over £50,000 from business and/or property, April 2026 is when MTD for ITSA becomes mandatory. If you're near that threshold, prepare early—digital tools, reliable record-keeping, and advice will become indispensable.