Making Tax Digital (MTD) is one of the most significant changes to the UK tax system in recent years, and from April 2026 it will begin to affect sole traders and landlords through the introduction of MTD for Income Tax Self Assessment (ITSA).

This change will fundamentally alter how income and expenses are recorded and reported to HMRC. If you are self-employed or receive property income, it is important to understand what is changing, who is affected, and how to prepare.

What is changing from April 2026?

From 6 April 2026, MTD for ITSA will become mandatory for individuals with qualifying income over £50,000. Instead of completing one annual Self Assessment tax return, affected taxpayers will be required to keep digital records and submit information to HMRC throughout the year using compatible software.

The key changes include digital record-keeping, quarterly updates, an end-of-year declaration, and the mandatory use of MTD-compatible software.

Digital record-keeping

Paper records will no longer be sufficient for those within MTD for ITSA. Income and expenses relating to self-employment and property must be recorded and stored digitally using software that meets HMRC’s MTD requirements. This applies to all relevant transactions, not just summaries or totals.

Quarterly updates

Under MTD for ITSA, you will submit updates to HMRC every three months. These updates provide a summary of your income and expenses and are cumulative, meaning figures build over the tax year. If an error is made in an earlier submission, it can be corrected in a later update.

These quarterly submissions are intended to give HMRC a more up-to-date picture of your tax position, but they do not replace the need for a final year-end submission.

End-of-year declarations

After the tax year ends on 5 April, you will submit a final declaration. This confirms your overall tax position, allows for any final adjustments, and includes other income such as employment income, dividends, or savings interest.

Software is mandatory

All submissions under MTD for ITSA must be made using compatible software. This could be full accounting software, a spreadsheet combined with bridging software, or a dedicated app. HMRC publishes guidance on approved software options, but choosing the right solution will depend on the complexity of your affairs and how you prefer to work.

Who is affected from April 2026?

You will need to comply with MTD for Income Tax from 6 April 2026 if all of the following apply:

• You are an individual registered for Self Assessment.
• You receive income from self-employment, property, or both.
• Your total qualifying gross income from these sources exceeded £50,000 in the 2024–2025 tax year.

Qualifying income is measured before expenses are deducted. HMRC will contact individuals they believe are affected based on previous tax returns, but responsibility for checking eligibility and preparing for the change remains with the taxpayer.

Future MTD timeline

MTD for ITSA is being introduced in phases, based on income thresholds.

• From April 2026, it will be mandatory for individuals with qualifying income over £50,000.
• From April 2027, the threshold reduces to £30,000.
• From April 2028, the threshold reduces further to £20,000.

Those with income below the relevant thresholds can continue using the existing Self Assessment system, although voluntary participation in MTD remains an option.

How to prepare for MTD for Income Tax

If you think you may be affected, preparation should start well before April 2026. Reviewing your 2024–2025 tax return is a good first step to confirm whether your income exceeds the £50,000 threshold.

It is also advisable to consider which MTD-compatible software will suit your needs and how digital record-keeping will fit into your current processes. For some, this may be a straightforward change; for others, it may require a more significant shift in how financial information is managed.

Getting ready early

While Making Tax Digital brings changes to how tax information is reported, it doesn’t have to be daunting. With the right support and a clear plan, the transition can be straightforward and even beneficial. At bk plus, we’re here to guide you through each step, help you stay compliant, and make sure the process works for you. If you have any questions or would like support with preparing for MTD, please contact your usual bk plus contact, who will be happy to help.