Compliance
What Sole Traders & Landlords Need to Know About Making Tax Digital Starting April 2026
A comprehensive guide on the rollout of MTD for Income Tax for UK sole traders and landlords, what it requires starting in April 2026 and how to comply.
By NomadicTax Research Team • 5-8 min read • June 7, 2026
## Overview of MTD for Income Tax (ITSA)
From **6 April 2026**, sole traders and landlords with **qualifying income** greater than **£50,000** from self-employment or property will be required to use **Making Tax Digital for Income Tax (MTD ITSA)**. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital?utm_source=openai))
The requirements include:
- Keeping **digital records** using software that is compatible with HMRC's rules. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/keep-digital-records?utm_source=openai))
- Submitting **quarterly updates** of income and expenses, not just an end-of-year return. ([gov.uk](https://www.gov.uk/government/publications/update-notice-for-making-tax-digital-for-income-tax/making-tax-digital-for-income-tax-update-notice?utm_source=openai))
- Filing the full Self Assessment tax return by **31 January** following the tax year. ([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))
## Who is in Scope & Phasing
| Phase | Qualifying Income Period | Threshold | Mandatory From |
|---|---|---|---|
| Phase 1 | Self-employment & property income over £50,000 (tax year 2024-25) | £50,000 | 6 April 2026 ([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))|
| Phase 2 | If qualifying income over £30,000 (tax year 2025-26) | £30,000 | 6 April 2027 ([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))|
| Phase 3 | Over £20,000 (tax year 2026-27) | £20,000 | 6 April 2028 ([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))|
## Compliance Requirements
Key requirements for those impacted:
- Use **software** that can create, store, correct digital records of income and expenses. Not all software qualifies—check approved listings. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital?utm_source=openai))
- Submit regular **quarterly updates**, even if no profit or income. Deadlines set over the tax year. ([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))
- For 2026-27 tax year: HMRC will **not penalise** for late quarterly updates during the first year. Penalty points will be introduced only after consistent late reporting. ([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))
## Practical Tips for Compliance
- **Choose software early**: test-drive tools that confirm with HMRC requirements. Allocate budget. ([gov.uk](https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax/?utm_source=openai))
- **Record keeping habits**: keep receipts, invoices, categorize expenses properly—remember property income requires greater categorisation. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/keep-digital-records?utm_source=openai))
- **Plan quarterly workflow**: allocate time regularly (e.g. monthly) to update income/expenses so quarterly submissions aren’t rushed.
- **Agent involvement**: If using an accountant, ensure they have an **Agent Services Account (ASA)** and can sign you up. ([gov.uk](https://www.gov.uk/government/news/tax-advisers-check-if-you-need-to-register-under-new-rules?utm_source=openai))
## Common Pitfalls & How to Avoid Them
- **Missing registration window**: not registering by the relevant date can lead to oversight; HMRC often sends letters ahead. If you don’t receive one but meet criteria, it’s still your responsibility. ([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))
- **Using non-compatible software or mixing tools** without integration or “bridging” software—can lead to submission failures. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/keep-digital-records?utm_source=openai))
- **No income in a period**: still must submit quarterly updates, even zero income—non-submission counts.
- **Late tax returns**: Self Assessment deadlines remain unchanged—full returns due 31 January. Quarterly updates are in addition. ([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))
## Example Scenario
**Tom** is a landlord whose property income plus side self-employment totals £60,000 in the tax year 2024-25. He hasn’t been keeping digital records and uses spreadsheets. For the 2026-27 tax year, Tom must:
1. Choose HMRC-approved compatible software, possibly migrate data.
2. Ensure records clearly separate property income, expenses, restricted finance costs.
3. Submit quarterly updates: Q1 by 7 Aug 2026, Q2 by 7 Nov, Q3 by 7 Feb, Q4 by 7 May 2027.
4. File full Self Assessment by 31 Jan 2028.
5. Take advantage: no penalty if a quarterly update is late in the first year.
## Long-Term Benefits
- More stable cash flow management through regular reporting.
- Early identification of tax liabilities rather than surprises at year-end.
- Potential for reduced professional fees if your processes are automated.
## Final Checklist Before April 6, 2026
- [ ] Determine if your qualifying income exceeded £50,000 in 2024-25.
- [ ] Choose and test compatible software.
- [ ] Sign up for MTD for Income Tax ahead of deadline.
- [ ] Ensure record-keeping systems are digitised and backed up.
- [ ] Familiarise with quarterly update due dates.
- [ ] Consult with your accountant or tax advisory to map out cash flow and tax payments.