What’s Changing from April 6, 2026
- MTD for Income Tax becomes mandatory for sole traders and landlords whose combined income from self-employment and property exceeds £50,000. (gov.uk)
- Those with income above £30,000 must join in April 2027, and those above £20,000 from April 2028. (gov.uk)
- Digital record-keeping becomes required: use certified software to log income and expenses; manual spreadsheets generally won’t suffice. (gov.uk)
- Quarterly updates replace annual self-assessment filings for qualifying individuals. (gov.uk)
Who’s Affected & Exemptions
| Category | Qualifying Threshold | Required from | Notes/Exemptions |
|---|---|---|---|
| Sole traders & landlords | > £50,000 | 6 April 2026 | Must use compatible software; those below the threshold are phased in later. (gov.uk) |
| Those with income >£30,000 | > £30,000 | 6 April 2027 | Part of phased rollout. (gov.uk) |
| Those with income >£20,000 | > £20,000 | 6 April 2028 | Final phase. (gov.uk) |
Steps to Prepare Now
- Review your income — sum self-employment + property income. If close to £50,000, start planning now.
- Choose suitable software — must be Making Tax Digital (MTD)-compatible. Explore marketplace options and sign up ahead of deadlines.
- Organise records digitally — receipts, invoices, business expenses should be digitised and categorised.
- Adopt quarterly reporting rhythm — prepare for submitting income/expense summaries every 3 months.
- Understand penalties — penalties for late or inaccurate reporting will apply once mandated. During early stages, some grace exists for first year for those newly entering the regime. (gov.uk)
Example (Hypothetical)
_Alice is a landlord receiving £24,000 annual rent and a sole-trader earning £28,000 from freelancing. Total income = £52,000.
From 6 April 2026, she must use digital records, quarterly updates via MTD-compatible software, and no longer rely solely on annual self-assessment.
For her, that means choosing the right software, setting quarterly reminders, and ensuring bookkeeping is accurate throughout the year.
_Bob runs a blog and earns £18,000; also owns a property with £15,000 rent. Combined = £33,000. He isn’t required to use MTD in 2026-27 but will need to from 6 April 2027. This gives him time to adjust.
Key Benefits & Risks
Benefits:
- More accurate tax reporting; less risk of errors or penalties.
- Better cash flow visibility; knowing tax owed earlier.
- Time saved at year-end with up-to-date records.
Risks if unprepared:
- Facing penalties for late submissions or non-compliance.
- Disruption in cash flow if liabilities catch up.
- Additional costs if last-minute software or support needed.
Action Plan Checklist
- Calculate combined income now
- Choose certified software and test it
- Digitise all past receipts/invoices
- Decide who (if any) will act as your agent
- Set quarterly schedules
- Review HMRC guidance regularly (especially for record-keeping direction updates)
"From April 2026, individuals with qualifying income above £50,000 will need to keep digital records, use MTD-compatible software and submit quarterly summaries…" (gov.uk)