Making Tax Digital for Income Tax is no longer a future concept. From 6 April 2026, many sole traders and landlords will be required to keep digital records and submit updates to HMRC throughout the year using approved software.
The start date, thresholds, and core rules are now confirmed. While Autumn Budget 2025 softened the penalty regime, it did not delay the rollout. If you are affected, the rest of the 2025/26 tax year is your preparation window.
This article explains who must join, what changes in practice, and the sensible steps to take now.
What Is MTD for Income Tax?
MTD for Income Tax changes how self-employed income and rental income are reported to HMRC.
Instead of keeping paper records and filing one self assessment return each year, you will be required to:
Keep digital records of income and expenses
Submit quarterly summary updates through MTD-compatible software
Make end-of-year adjustments
Submit a final declaration by 31 January
This does not mean filing five full tax returns each year. Quarterly submissions are summaries generated from your software, followed by a year-end finalisation.
Who Must Join and When
MTD for Income Tax applies based on your qualifying income, which is your total gross income from self-employment and property before expenses or tax.
The confirmed timetable is:
From 6 April 2026 if your qualifying income for 2024/25 exceeds £50,000
From 6 April 2027 if your qualifying income for 2025/26 exceeds £30,000
From 6 April 2028 if your qualifying income for 2026/27 exceeds £20,000
HMRC will look at your most recent self assessment return to determine when you must join. Other income, such as employment, pensions, or savings interest, does not count towards the thresholds.
Once you are in MTD, current guidance suggests you remain in the system even if your income later falls below the threshold, so it should be treated as a long-term change.
What Changes for Sole Traders
If you are a sole trader within scope, MTD will change how you manage your bookkeeping and reporting.
You will need to:
Keep all business records digitally using MTD-compatible software
Submit four quarterly updates each tax year for each sole trader business
Complete an end-of-period statement with any accounting or tax adjustments
Finalise your tax position via a final declaration by 31 January
You will still be responsible for registering for self assessment, paying income tax and National Insurance, and managing payments on account.
If you operate more than one sole trader business, each must be reported separately.
What Changes for Landlords
Landlords with qualifying rental income above the thresholds must also move to digital record-keeping and quarterly updates.
Key points include:
Digital records must be kept for each property business
Separate quarterly updates are required if you are both a landlord and a sole trader
Jointly owned properties can be reported either in full or by individual share during the year, with full reconciliation at year end
Property type does not affect MTD; the trigger is income level, not whether the property is furnished or unfurnished
Many landlords still rely on spreadsheets or paper records. For those joining in April 2026, now is the time to transition to suitable software.
Key Dates to Be Aware Of
Important milestones include:
31 January 2026: Deadline for the 2024/25 self assessment return under the current system
6 April 2026: MTD begins for those with qualifying income over £50,000
7 August 2026: First quarterly update deadline
31 January 2027: Final traditional self assessment return for 2025/26
From 2027/28 onwards, the aim is for finalisation to be completed fully through software by the January deadline.
What the Autumn Budget Changed
Autumn Budget 2025 confirmed that MTD will start in April 2026 as planned, but introduced some easing measures:
No penalty points for late quarterly updates during the first 12 months
An extra 15 days before late payment penalties apply in the first year
Continued deferrals or exemptions for certain groups, including some trust, averaging, and care relief cases
These changes are designed to ease the transition, not remove the obligation.
Six Practical Steps to Take Now
If your income is above or close to £50,000, preparation should start now:
Confirm whether you are in scope using your latest tax return
Move away from paper records or basic spreadsheets
Choose MTD-compatible software that fits how you work
Decide whether to use standard tax year quarters or calendar quarters
Clean up existing bookkeeping data
Plan for cashflow using more regular tax estimates
Some businesses may also benefit from voluntary early sign-up to the MTD pilot to get used to the new process before it becomes mandatory.
Final Thought
MTD for Income Tax is a significant shift in how sole traders and landlords interact with HMRC. The rules are set, the start date is fixed, and preparation now will make the transition far smoother.
If you are unsure whether MTD applies to you or want help getting ready, it’s worth seeking advice well before April 2026 so you enter the new system with confidence.