Making Tax Digital for Income Tax: a guide for sole traders and landlords

Making Tax Digital for Income Tax (MTD ITSA) changes how self-employed people and landlords keep records and report to HMRC. The first mandatory phase began on 6 April 2026. Affected people must keep digital records, send quarterly updates and submit their annual tax return through compatible software. Quarterly updates do not replace the tax return.

Does it apply to you?

The first MTD for Income Tax phase is already in force, with later phases to follow. Your qualifying income is your combined gross income from self-employment and property, before expenses, assessed using an earlier tax year:

• Qualifying income over £50,000 in 2024–25: you should already be using MTD from 6 April 2026, unless exempt.
• Qualifying income over £30,000 in 2025–26: MTD from 6 April 2027.
• Qualifying income over £20,000 in 2026–27: MTD from 6 April 2028.

Qualifying income is your combined gross income from self-employment and property, before expenses, assessed using an earlier tax year. Some people are exempt or can apply for an exemption, for example if they are digitally excluded, so not everyone is brought in automatically. HMRC’s official checker is here: GOV.UK: find out if and when you need to use MTD for Income Tax (opens in a new tab).

Because the thresholds step down over several years, it is worth checking your position annually rather than assuming last year’s answer still holds. Ask us to check your position if you are unsure.

HMRC is now signing up some people it identifies as required to use MTD for 2026–27, but you remain responsible for checking your position. Do not wait for a letter to check. See GOV.UK: what to do if HMRC has signed you up for MTD for Income Tax (opens in a new tab).

What “digital records” actually means

• Income and expenses recorded digitally, not on paper or in a shoebox.
• Records kept as you go rather than reconstructed at the year-end.
• Software that can connect to HMRC, either accounting software or bridging software linked to a spreadsheet.

How quarterly updates work

You send a summary of income and expenses for each quarter. These updates are cumulative summaries, not final figures; accounting adjustments, reliefs and allowances are dealt with afterwards, when you submit your annual tax return through compatible software.

Your tax payment dates do not change solely because of MTD. What changes is the rhythm of reporting through the year.

If you have property income or work under CIS, see our landlord records guide and CIS subcontractors guide.

Practical steps for current and later phases

• Separate business banking, so records are easier to keep accurately.
• Choose compatible software and get your opening position set up correctly.
• Build a simple monthly habit for receipts and bank reconciliation.
• Agree who does what: what you record, and what we review and file.

Where we can help

We set up compatible software, move your records across, handle quarterly updates and submit your annual tax return. See our Making Tax Digital for Income Tax service or our taxation services and planning.

This guide is general information, not advice for your specific circumstances. HMRC rules and thresholds change; please check with us before acting.