From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will change the way many sole traders and landlords report income tax. Instead of one annual income tax return, you will keep digital records and send quarterly updates to HMRC using compatible software. For busy owners already juggling cashflow, clients and staff, getting ahead of this now will make life much easier.
MTD matters because it affects a huge slice of the business community. At the start of 2025, UK SMEs employed around 16.9 million people and generated an estimated £2.8 trillion of turnover (Business population estimates 2025, Department for Business and Trade). On top of that, there were about 4.39 million self-employed people in the UK in mid-2025 (UK labour market briefing, House of Commons Library, 2025). Many of those owners will either be in the first MTD wave or not far behind.
The good news is that there is still time. In this guide, we explain who joins MTD for income tax from 6 April 2026, what quarterly updates involve and the digital records you will need. We then finish with a simple checklist for sole traders and landlords to put systems and habits in place during 2025/26, so the move to digital reporting feels controlled rather than stressful.
Who joins Making Tax Digital for income tax in 2026?
MTD for ITSA will be phased in. HMRC has already confirmed the thresholds and timing. If your qualifying income from self-employment and property is:
- Over £50,000 in 2024/25: You must use MTD for Income Tax from 6 April 2026.
- Over £30,000 in 2025/26: You will join from 6 April 2027.
- Over £20,000 in 2026/27: The government plans to bring you into MTD from 6 April 2028.
Qualifying income is your total gross income from self-employment and property before expenses, across all your sole trade businesses and UK property. It does not include salary, pensions, dividends or savings interest. HMRC will look at your Self Assessment returns to decide whether you cross the income tax threshold for MTD.
If you are a sole trader with one business and a rental property, HMRC will add those figures together. If you run two businesses, they also go in the same pot.
Some people are outside MTD for income tax for now. Partnerships, trusts, estates and individuals with very low self-employment or property income are not in the first phase. However, the direction of travel is clear. If your income tax affairs involve self-employment or rentals, it is sensible to plan as if you will be brought into MTD at some point.
What quarterly updates will you have to send?
Under MTD for ITSA, you will still work to the familiar tax year and Self Assessment deadline. However, instead of one set of figures each year, you will send regular digital updates for each business or property portfolio.
From 6 April 2026, if you are within scope you will have to:
- Keep digital records: Record income and expenses in MTD-compatible software or a digital tool that links to HMRC’s system.
- Submit quarterly updates: Send summary figures to HMRC every quarter for each source of income. The first quarter from 6 April to 5 July 2026 will be due by 7 August 2026 (ICAEW, 2025).
- Send an end of period statement (EOPS): Once the tax year is over, finalise each business or property income source with any accounting or tax adjustments.
- Submit a final declaration: Replace today’s income tax return with a single declaration confirming all income, reliefs and tax due for the year by 31 January after the tax year.
Quarterly submissions will not normally trigger quarterly tax payments. You will continue to pay income tax and Class 4 NICs in line with the Self Assessment timetable, unless HMRC specifically offers a different payment plan. However, your figures will be with HMRC far earlier, so the system should pick up errors more quickly.
Handled well, this new pattern can actually help cashflow planning. Regular figures give you a clearer view of profit, drawings and tax to set aside, instead of one big shock each January.
Digital records and software – setting yourself up properly
The heart of MTD for income tax is consistent, accurate digital records. The rules do not force you to choose a particular brand of software, but it must be compatible with HMRC’s MTD for Income Tax system.
For most sole traders and landlords, a simple cloud bookkeeping package or a specialist property tool will be enough. Some may prefer spreadsheets with bridging software, though this can be harder to keep tidy over time. Whichever route you choose, the important thing is to avoid running multiple disconnected systems.
Good practice looks like this:
- Single source of truth: One main system holds all day-to-day entries for each business or property portfolio.
- Consistent categories: You use the same income and expense headings throughout the year, aligned to HMRC income tax rules.
- Supporting documents: Invoices, receipts and bank statements are either attached or easily matched to each entry.
- Regular checks: You or your accountant review bank reconciliations and key balances monthly or quarterly.
If you already use digital tools, 2025/26 is about tightening up processes and checking whether your current software is on HMRC’s approved list for MTD for Income Tax. If you are new to digital records, consider starting with one business or property, then scaling up once the basics feel comfortable. Our taxation services team can help you choose and configure the right option.
Checklist: Practical steps for sole traders and landlords
Use this simple checklist across the 2025/26 tax year so that MTD for income tax feels like a controlled change rather than a deadline panic.
- Confirm if you are in scope: Review your 2024/25 Self Assessment figures and estimate 2025/26 gross income from self-employment and property. Check HMRC’s eligibility guidance to see when you will enter MTD (HMRC, 2025).
- Map your income sources: List each business, partnership interest and property portfolio, including joint properties. Work out which ones will need separate quarterly updates.
- Choose suitable software: Shortlist two or three MTD-compatible tools that fit your business size and record keeping habits. Speak to us if you want practical feedback on features and pricing – we work with a range of systems every day.
- Start digital record keeping early: Begin recording income tax data digitally for 2025/26, even though it is not mandatory yet. Treat this as a rehearsal to find gaps or issues.
- Tidy your paperwork: Bring bank accounts, invoices and rental statements up to date. Scan or upload documents so that every income and expense line has clear evidence behind it.
- Align with your accountant: Agree who will do what. For example, you keep day-to-day entries, we review and submit quarterly income tax updates on your behalf.
- Plan for quarterly time: Block out diary slots shortly after each quarter end to check figures, resolve queries and approve submissions.
- Review tax set-aside habits: Use regular reports to adjust how much you set aside for income tax and NICs so that the January and July payments are manageable.
Having a structure like this turns MTD preparation into a series of straightforward steps rather than one large project. If you already have support with bookkeeping, our bookkeeping and management accounts service can be integrated with your MTD plans so that quarterly submissions sit alongside your usual management information.
Planning your next move on income tax digital reporting
MTD for income tax is not something to fear, but it is something to respect. The rules are now confirmed, the April 2026 start date is fast approaching and HMRC will rely on your digital records when assessing your income tax position. Leaving it until the last minute risks rushed software choices, patchy records and avoidable errors.
Taking action during the 2025/26 tax year spreads the work. You can test software, refine how you capture income and expenses, and build the habit of reviewing figures quarterly. Many owners find that once they make the shift, the same information improves day-to-day decisions as well as income tax compliance.
Our role is to facilitate that shift as smoothly and straightforwardly as possible. We can help you understand whether your current income places you in the first wave of MTD, review how your bookkeeping supports accurate income tax reporting and agree on who will handle quarterly submissions. If you are a landlord, we can also look at how property structures, finance costs and allowances fit into your wider personal tax planning.
If you would like tailored support with Making Tax Digital for income tax – from choosing software to handling quarterly submissions and the final declaration – please get in touch with us.