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.