Compliance
Navigating MTD for Income Tax: What Sole Traders & Landlords Need to Do from April-2026
Making Tax Digital for Income Tax (MTD ITSA) begins 6 April 2026 for many self-employed and landlords – here’s what that means for record-keeping, reporting and avoiding penalties.
By NomadicTax Research Team • 5-8 min read • May 17, 2026
## What Is MTD for Income Tax (ITSA)?
**MTD for ITSA** is HMRC’s program mandating quarterly digital reporting of income and expenses for individuals with self-employment or property income (“sole traders and landlords”), using MTD-compatible software. This replaces paper records and annual-only filings for those with higher incomes. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital?module=inline&pgtype=article&utm_source=openai))
## Who’s In Scope from 6 April 2026
- Sole traders and landlords with **qualifying income over £50,000** in trade or property income (gross, before expenses) based on the 2024-25 tax year. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital?module=inline&pgtype=article&utm_source=openai))
- From **6 April 2027**, the threshold drops to £30,000.
- From **6 April 2028**, threshold will further drop to £20,000.
- **Non-UK residents** with self-employment or property income in the UK are also included; residence/domicile do not exempt scope. ([gov.uk](https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax?utm_source=openai))
## What You Must Do in Practice
- **Use compatible software**: you must keep digital records using software approved by HMRC and send four quarterly summary reports plus the final Self-Assessment declaration. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital?module=inline&pgtype=article&utm_source=openai))
- **Understanding deadlines**: quarterly updates due roughly in August, November, February and May; final declaration and full tax filing remain due by 31 January following end of tax year.
- **Handling changes in circumstances**: if your sources of income change (e.g. you stop being a landlord but remain self-employed or vice versa), obligations may still persist. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-142/issue-142-of-agent-update?utm_source=openai))
## Examples
- **Example A**: Jane is a landlord in 2024-25 with property income of £60,000 (gross), no trade income. She must enrol in MTD ITSA from 6 April 2026 and begin quarterly reporting.
- **Example B**: Mike is self-employed with trade income of £45,000 and also has £10,000 of property income. His qualifying income is £55,000 → falls in scope 2026.
- **Example C**: Paula’s trade income in 2024-25 is £52,000, but in 2025-26 it drops to £25,000. She must begin MTD ITSA in April 2026 anyway because eligibility is assessed on 2024-25. Exiting the regime has its own rules.
## Consequences of Non-Compliance
- Missing registration or failing to use compatible software could lead to errors in your tax estimates and possibly penalties (though initially HMRC has indicated penalties for late quarterly updates **won’t** apply during the testing/familiarisation phase in early periods). ([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
- Incorrect software or late submission of final declaration retains the standard risks associated with Self-Assessment.
## Actionable Advice for Getting Ready
1. **Audit your income streams**: calculate qualifying income for 2024-25 now.
2. **Choose MTD-compatible software**: explore options, test functionality before deadlines.
3. **Setup digital record-keeping**: methodically track income and expenditures—hybrid or manual records won’t suffice.
4. **Register early** once you know you're in scope; agents can register on behalf of clients.
5. **Stay updated via HMRC guidance** & review agent updates such as Issue 142 in April 2026 for important reminders. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-142/issue-142-of-agent-update?utm_source=openai))
## Broader Considerations
- Compliance costs may rise initially (software, training) but long-term benefits: fewer end-year surprises, errors reduced, better visibility of tax position.
- If you fall close to thresholds, watch projections. Growth or drop-offs may alter your status.
- Seek professional advice if overseas income, partnerships, or other complex structures are involved.