Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is coming — and for many sole traders and landlords, the deadline is less than a year away. After several delays, HMRC has confirmed the rollout will begin in April 2026. Here is everything you need to know.
Who Does It Affect and When?
MTD for Income Tax will be introduced in phases based on annual income:
| Start date | Who is affected |
|---|---|
| 6 April 2026 | Sole traders and landlords with qualifying income over £50,000 |
| 6 April 2027 | Those with qualifying income over £30,000 |
| 6 April 2028 | Those with qualifying income over £20,000 |
"Qualifying income" means gross income from self-employment and property combined — before any expenses are deducted. Employees whose only income is a PAYE salary are not affected.
What Will Change?
Under MTD for ITSA, the annual Self Assessment tax return will be replaced by a new system with three core obligations:
Digital record keeping
You must keep records of all income and expenses digitally using HMRC-compatible software. Spreadsheets alone may not qualify — the software must be able to submit data directly to HMRC via an API.
Quarterly updates
A summary of income and expenses must be submitted to HMRC four times a year — broadly every three months. The first submission for the 2026/27 tax year will be due by 7 August 2026.
End-of-year declaration
After the end of the tax year, you will confirm your figures and finalise your tax position — replacing the current Self Assessment return. The first final declaration for 2026/27 will be due by 31 January 2028.
What Software Do You Need?
HMRC maintains a list of compatible software on GOV.UK. Popular options used by our clients include Xero, QuickBooks, Sage, and Dext. The key requirement is that the software must be able to communicate directly with HMRC's systems — so all data transfers must use approved digital links.
HMRC has confirmed that genuine first-year failures will not attract penalty points during 2026/27 — but normal penalty rules apply from 2027/28 onwards.
Steps to Take Now
- Confirm whether you are in scope — check your gross income from self-employment and property for the most recent tax year.
- Choose your software — if you are not already using cloud accounting software, now is the time to start. Getting used to the software before the deadline reduces the risk of errors.
- Start keeping digital records — even before MTD is mandatory, transitioning your bookkeeping to digital format will make the switch far easier.
- Talk to your accountant — your accountant may be able to submit quarterly updates on your behalf, and will need to be set up with the right access to your software.
Not sure if MTD applies to you or which software to use?
We help clients across all sectors get MTD-ready. Contact us today for a free consultation.