From 6 April 2026, Making Tax Digital for Income Tax (MTD for ITSA) will fundamentally change how many landlords and sole traders report their income to HMRC.

After almost a decade of delays, HMRC has confirmed that this time the rollout is going ahead. While the system will undoubtedly evolve over time, quarterly digital reporting will be mandatory for those who fall within scope.

For many taxpayers, the challenge isn’t the tax itself. It’s the shift in habits, systems and record-keeping that quarterly reporting requires.

This article explains what Making Tax Digital is, who it applies to, and when, so you can understand whether it affects you and what to expect next.

What is Making Tax Digital?

Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system.

Its stated aims are to:

  • Improve accuracy
  • Reduce errors
  • Provide HMRC with more timely information
  • Encourage better record-keeping throughout the year

MTD is already in place for VAT. The next phase, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), applies to landlords and sole traders.

Instead of submitting one tax return each year, affected taxpayers will be required to:

  • Keep digital records
  • Submit quarterly updates of income and expenses using MTD-compatible software
  • Complete a year-end submission to finalise their tax position

When does Making Tax Digital start?

MTD for Income Tax starts from 6 April 2026, with a phased introduction based on income levels.

The key dates are:

  • From 6 April 2026
    Applies if your combined self-employed and/or property income exceeds £50,000
  • From 6 April 2027
    Threshold reduces to £30,000
  • From 6 April 2028
    Threshold reduces again to £20,000

These thresholds are based on gross income (turnover), not profit.

HMRC will assess your eligibility using your previous tax return, so many people will be brought into MTD before they realise it.

Who does Making Tax Digital apply to?

MTD for ITSA applies to individuals who earn income from:

  • Self-employment
  • UK or overseas property rental

If you have both, the income figures are added together to assess whether you exceed the threshold.

What does not count towards the threshold?

  • PAYE employment income
  • Pension income
  • Dividends
  • Partnership income (for now)

Partnerships and LLPs are not yet included, although this is expected to change in later phases.

If you’re a landlord or sole trader and want help preparing for MTD, you can book a free consultation with one of our advisers.

Will there still be a year-end tax return?

Yes.

One common misconception is that quarterly updates replace the tax return. They don’t.

Under MTD you will submit:

  • Four quarterly updates during the tax year
  • A final year-end submission (sometimes called the End of Period Statement)

This final submission is where:

  • Adjustments are made
  • Reliefs are claimed
  • The tax position is finalised

The risk we see is where quarterly figures and year-end figures differ significantly, which can attract HMRC attention. This is why good systems and regular adjustments are so important.

Why preparation matters

MTD increases the frequency of reporting, not necessarily the complexity of tax.

But it does require:

  • Cleaner bank accounts
  • Better separation between personal and business spending
  • Reliable digital bookkeeping
  • A clear process for handling adjustments throughout the year

Those who prepare early tend to:

  • Spend less time fixing issues later
  • Reduce the risk of HMRC queries
  • Avoid rushed, expensive decisions close to April 2026

Our bookkeeping and tax advisory services can help ensure your records and quarterly submissions are accurate and compliant. Find out more about our services.

What should you do next?

If MTD is likely to affect you, now is the time to:

  • Understand your likely start date
  • Review how clean your records currently are
  • Consider whether your current systems will cope with quarterly reporting

Over the coming weeks, we’ll be sharing practical guidance on:

  • Bank account setup
  • Software options
  • Quarterly submissions
  • What HMRC will really be looking at

We’re also hosting a free MTD briefing event in March, where we’ll explain what this means in practice and answer common questions.

If you want a detailed breakdown of compliance requirements, thresholds and preparation steps, read our full guide to complying with Making Tax Digital for Income Tax.

Preparing for Making Tax Digital doesn’t have to be stressful. Book your free 45-minute consultation or register for our MTD briefing event to get practical guidance and stay compliant.

Act now

Other posts of interest

See more articles