Introduction
From 6 April 2026, sole traders and landlords in the UK whose qualifying income from self-employment and property exceeds £50,000 per year must use Making Tax Digital for Income Tax (MTD ITSA). This means keeping digital records, sending quarterly updates, and filing annual returns using compatible software. (gov.uk)
Below are the key steps you need to take, practical examples, and how this fits with the wider tax calendar.
What is qualifying income?
- It consists of turnover from self-employment plus levels of property income before expenses; it doesn’t include income from employment or pensions. (gov.uk)
- The test looks at your income in the year 2024-25 for those due to start in April 2026. If your qualifying income then was over £50,000, MTD ITSA applies from 6 April 2026. (gov.uk)
Key Obligations and Practical Actions
| Obligation | What you must do | Example |
|---|---|---|
| Digital Records | Use MTD-compatible software to record income & expenses, correct errors as soon as you spot them. | If you hire accounting software, ensure it allows joint property-owner records or supports your specific basis period. (gov.uk) |
| Quarterly Updates | Send short updates every quarter via your software. First deadline was 7 August 2026 for many. (gov.uk) | |
| Annual Self Assessment Return | Still due by 31 January following end of tax year; done via compatible software. | For tax year 2025-26, return and payment due by 31 January 2027. |
Penalties & Exemptions
- For 2026-27 year, late quarterly updates do not attract penalty points. (gov.uk)
- But from 6 April 2027, those with qualifying income over £30,000 will also be brought into scope. For income over £20,000, mandation begins 6 April 2028. (gov.uk)
- Certain groups are exempt or deferred: ministers of religion, Lloyd’s underwriters, and taxpayers where digital use is unreasonable. (gov.uk)
Example Scenario
Let’s say Jane is a landlord with property income of £35,000 and a part-time side business with turnover £20,000 in 2024-25:
- Her qualifying income = £35,000 + £20,000 = £55,000 → above the £50,000 threshold for 2024-25.
- Jane must use MTD ITSA from 6 April 2026.
- She must keep digital records, send quarterly updates, and file annual return via compatible software by 31 January 2027. If she misses a quarterly deadline in 2026-27, no penalty point yet, but points begin after April 2027.
Actionable Advice
- Check your 2024-25 turnover from self-employment and property to see if you’re in scope now.
- Choose MTD-compatible software early so you’re ready for quarterly updates.
- Review software support for reporting basis periods, joint property ownership, exemptions if needed.
- Keep records regularly—don’t wait until end of year.
- For those below thresholds, consider whether voluntary sign-up may help streamline future compliance.
What’s Next?
- Threshold lowering will bring in many more taxpayers: £30,000 from April 2027, £20,000 from April 2028. (gov.uk)
- HMRC will begin sign-ups from September 2026 for those obligated but not yet enrolled. (gov.uk)
- Important to monitor exemptions and new guidance as system settles in.
By starting early, choosing proper software, and keeping accurate records, sole traders and landlords can navigate the MTD ITSA changes successfully and with minimal disruption.