Making Tax Digital for Income Tax: what is changing and when
Making Tax Digital for Income Tax (MTD for ITSA) is the biggest change to Self Assessment in years. If you're a sole trader or landlord, here's what's changing, who it affects, and when.
What is MTD for Income Tax?
MTD for Income Tax replaces the once-a-year Self Assessment return with digital record-keeping and quarterly updates to HMRC, using compatible software. You'll send four updates a year plus a final declaration, instead of one return.
Who it affects, and when
It's being phased in by income level (your gross self-employment and/or property income, before expenses):
| From | If your qualifying income is over |
|---|---|
| April 2026 | £50,000 |
| April 2027 | £30,000 |
| April 2028 | £20,000 (announced) |
It applies to sole traders and landlords. Income from employment or pensions doesn't count toward the threshold, but it can still need reporting elsewhere.
Key point: the threshold is based on turnover/gross income, not profit. A landlord with £55,000 of rent but modest profit is still caught from April 2026.
What you'll need to do
- Keep digital records of income and expenses (spreadsheets alone won't be enough unless bridged by software).
- Send a quarterly update to HMRC through compatible software.
- Submit a final declaration after the tax year to confirm the figures and any other income.
What it means in practice
More frequent admin, but also fewer year-end surprises if your records are kept current. The main job is getting onto compatible software and into a quarterly rhythm — which is where we set clients up so the deadlines look after themselves.
Not affected yet?
If your income is under the threshold for now, nothing changes immediately — but the thresholds are dropping, so it's worth getting your record-keeping ready. We'll tell you exactly when it applies to you.