Compliance
Preparing for the £20,000 MTD-ITSA Threshold: What Self-Employed & Landlords Need to Do
From April 2028, sole traders and landlords with income over £20,000 will be required to use Making Tax Digital for Income Tax Self Assessment – here’s a roadmap.
By NomadicTax Research Team • 5-8 min read • May 21, 2026
## What’s Changing When?
Starting **6 April 2028**, the threshold to mandate **Making Tax Digital for Income Tax Self Assessment (MTD-ITSA)** will be lowered from **£30,000 to £20,000** total qualifying income. This affects sole traders and landlords whose combined self-employment and property income falls between these thresholds. ([gov.uk](https://www.gov.uk/guidance/check-if-and-when-you-need-to-register-as-a-tax-adviser-with-hmrc?utm_source=openai))
## Who Will Be Affected?
- Sole proprietors and landlords who currently report income between **£20,000-£30,000**. Approximately **970,000** additional individuals are expected to come into scope. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- Those currently exempt or voluntary participants under MTD-ITSA because their income is below prior thresholds. |
## New Obligations Under MTD-ITSA
Once in scope, you will need to:
- Keep **digital records** of all income and expenses related to trade or property using software compatible with MTD rules. Spreadsheets may be used with bridging software. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- Submit **quarterly updates** to HMRC reflecting your digital records, plus the annual final return. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- File and pay by standard deadlines (e.g. January following the tax year end). |
## Impact and Costs
The government estimates:
- **Transitional costs** of about **£380 million**, mostly setup and familiarisation. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- **Annual ongoing compliance costs** rising by about **£101 million**, as those newly mandated adjust. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- For many, costs may include software subscriptions, hardware upgrades, or paying agents. |
## Action Plan: How to Be Ready Now
1. **Assess your income** – calculate your combined property + trading income for recent years to see if you will be above the new £20,000 threshold.
2. **Review current record keeping** – do you use paper or spreadsheets? If so, begin exploring MTD-compatible software or bridging solutions that work with spreadsheets. |
3. **Plan your cash flow** – quarterly reporting means you need to track income and expenses closely throughout the year, not just at year-end. |
4. **Seek advice** – especially for property income or mixed income types, talk to an accountant or agent familiar with MTD-ITSA. |
5. **Budget for costs** – allocate budget for software, training and possibly agent fees. |
## Example Scenario
Emily lets two properties and runs a small baking business; her total qualifying income is currently £25,000 annually. Under the new rules, from **6 April 2028**, she'll need to use digital record keeping, send quarterly updates and her annual return through MTD-compatible software. She decides to switch to a bookkeeping app with bridging tools now to avoid scrambling in 2028. |
**Bottom line**: If your income edges close to or exceeds £20,000, it’s wise to start preparing now. Digital systems, accurate records, and planning ahead will help you comply and avoid penalties or surprises.