Digital Nomad
Navigating Making Tax Digital (Income Tax): A Guide for Sole Traders & Landlords
Starting 6 April 2026, many sole traders and landlords will need to comply with the new Making Tax Digital rules — here’s what that means and how to prepare.
By NomadicTax Research Team • 5-8 min read • May 6, 2026
## What’s Changing with Making Tax Digital for Income Tax (MTD ITSA)
From **6 April 2026**, sole traders and landlords with **qualifying income over £50,000** must:
- use **compatible software** to keep digital records of income and expenses for business and/or property sources;
- **send quarterly updates** to HMRC on those figures;
- continue filing the annual self-assessment tax return, but built on those digitally updated records. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital?utm_source=openai))
This is being phased: April 2027 brings a £30,000 threshold, and by April 2028 it drops to £20,000. ([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))
## Why It Matters
- Maintains more consistent visibility of your income & expenses throughout the year.
- Helps with cash flow forecasting and tax estimates — fewer surprises in January.
- Digital recordkeeping and software can reduce errors, lost receipts, or overlooked tax reliefs. ([gov.uk](https://www.gov.uk/government/publications/get-ready-for-making-tax-digital-for-income-tax/benefits-of-making-tax-digital?utm_source=openai))
## Who Is Affected & Who Isn’t
**Affected**:
- Sole traders and landlords with gross income over £50,000 from self-employment & property in tax year 2024-25.
- Businesses in scope will need to adopt compatible software and adapt quarterly update habits. ([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))
**Exemptions** may apply if you’re digitally excluded or meet certain relief/allowance criteria.
If your gross qualifying income is lower, you have until future phases to fall under the mandate. ([gov.uk](https://www.gov.uk/guidance/check-when-to-sign-up-for-making-tax-digital-for-income-tax?utm_source=openai))
## Actionable Steps Before Implementation
1. **Check your qualifying income**: Review your tax return for 2024-25. More than £50,000? You're in phase from April 2026. If you miss that, get ahead for next phases. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/introduction?utm_source=openai))
2. **Get software that’s compatible**: HMRC has a list of approved software. Many options out there — choose one that fits your workflow.
3. **Sign up early**: Even if you don’t yet need it by law, practicing with quarterly updates can smooth the transition.
4. **Understand new penalties**: They're points-based for late submissions — occasional slip-ups are forgiven, but repeated delays may trigger financial penalties. ([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))
5. **Consider seeking exemptions**: If digital tools are not accessible to you or you meet reliefs that exempt you, apply through HMRC. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksi_20260336_en.pdf?utm_source=openai))
## Practical Example
Jenny is a landlord earning £60,000 in gross property income, plus £10,000 self-employment, in 2024-25. Since her qualifying income from business + property exceeds £50,000, Jenny must use MTD for Income Tax starting **6 April 2026**. She orders compatible software, begins digital recordkeeping immediately, and schedules quarterly submissions on 7 August, 7 November, 7 February, and 7 May. Her annual return will still be due by **31 January 2028**, but much of the vault of paperwork will be pre-captured via software through the year.
## Tips to Stay Ahead
- Review 2024-25 income now to know which phase you’re in.
- Start using software to record all receipts, invoices, expenses.
- Organize bank, property & business records digitally (scanned, dated, categorized).
- Plan quarterly check-ins (with yourself or bookkeeper) to avoid year-end stress.
- Stay informed on updates from HMRC — they’re publishing Helpsheets and guidance especially relevant to digital obligations. ([gov.uk](https://www.gov.uk/government/publications/limit-on-income-tax-reliefs-hs204-self-assessment-helpsheet/hs204-limit-on-income-tax-reliefs-2026?utm_source=openai))
## Summary
This is one of the biggest shifts in UK tax administration in recent years. The goal: smoother income reporting, fewer errors, more predictability. If you fall into the phased mandate, getting ahead now — selecting compatible software, organizing records, understanding penalties & reliefs — will save hassle and surprises. With the right prep, you’ll make April 2026 your best manage-your-tax-affairs launch, not just another deadline rush.