Making Tax Digital for Income Tax Self Assessment for Sole Traders and Landlords

If you’re a sole trader or a landlord, big changes are coming to the way you report your income tax.

HMRC’s Making Tax Digital (MTD) initiative is transforming the tax system to make it more efficient, accurate, and easier for taxpayers to manage their affairs.

In this blog, we’ll break down what MTD for Income Tax Self Assessment (ITSA) means for you, when it’s happening, what you need to do, and how we’re here to support you every step of the way.

What is Making Tax Digital for Income Tax Self Assessment?

Making Tax Digital for ITSA is part of HMRC’s wider MTD programme, which is already in place for VAT. The goal is to replace the traditional annual Self Assessment tax return with a more modern, digital process.

Instead of filing one return per year, you’ll need to keep digital records and submit updates every quarter using HMRC-compliant software.

Who Does It Apply To?

MTD for ITSA will apply to:

• Sole traders with annual business income over £50,000 (from April 2026)
• Landlords with rental income over £50,000 per year (from April 2026)
• Those earning between £30,000 and £50,000 will need to comply from April 2027

If your income is below £30,000, HMRC has stated they will review how MTD might apply to you at a later date.

Important: The £50,000 (or £30,000) threshold is total gross income, not profit, and applies to the combined income from all sole trader businesses or rental properties you operate.

For example, Bill has gross income (i.e. before expenses) declared in the 2024/25 tax return as follows:

• £23,000 from rental properties held in his own/joint names (i.e. not in a limited company)
• £31,000 from self-employment

His total qualifying income is therefore £54,000, which exceeds the £50,000 threshold and he will have to register for MTD for ITSA for 2026/27 and make quarterly returns for both his rental business and self-employed business.

How is MTD for ITSA Being Phased In?

Here’s a quick timeline:

• April 2026: Sole traders and landlords earning over £50,000 join MTD.  HMRC will look at the 2024/25 tax return to see if qualifying income exceeds £50,000.
• April 2027: Those earning over £30,000 join.  HMRC will look at the 2025/26 tax return to see if qualifying income exceeds £30,000.   
• April 2028: Those earning over £20,000 join.  HMRC will look at the 2026/27 tax return to see if qualifying income exceeds £20,000.   

HMRC may also extend MTD to partnerships and could reduce the earnings limit depending on how successful the April 2026 and 2027 phase-ins have been.

What Will You Need to Do?

To stay compliant with MTD for ITSA, you’ll need to:

• Keep Digital Records
  You must maintain digital records of your income and expenses using compatible software or apps.
• Submit Quarterly Updates
  Every three months, you’ll send a summary of your income and expenses to HMRC.  Each quarterly update must be submitted by the 7^th of the month following the end of the relevant quarter.  For example, the first quarter to fall under MTD for ITSA will be the 5^th July 2026, and the return must be made by the 7^th of August 2026.
• End-of-Period Statement (EOPS)
  At the end of the tax year, you’ll confirm your business income and make any final adjustments.
• Final Declaration
  This replaces the traditional Self-Assessment return, confirming all income sources for the year.

How We’re Helping You Stay Compliant

We know this is a big change, especially if you’re used to managing your accounts manually or with spreadsheets. That’s why we’re here to help:

• ✅ Digital Accounting Solutions
  We’ll help you choose and set up HMRC-compliant software that suits your business or property needs.
• ✅ Training & Support
  We will provide guidance and training to get you comfortable with digital record-keeping and quarterly submissions.
• ✅ Quarterly Review Services
  We offer packages to review and submit your quarterly updates on your behalf, reducing your admin burden.
• ✅ End-of-Year Filing
  We’ll handle your EOPS and Final Declaration to ensure everything is accurate and compliant.

Final Thoughts

MTD for ITSA represents a major shift in the way sole traders and landlords manage their taxes — but with the right tools and support, it doesn’t have to be daunting.

Now is the time to start preparing. Even if you’re not due to join until 2026 or 2027, getting your systems in place early will save time, stress, and potential penalties later on.

Need help getting started?
We’re ready to help you go digital — smoothly, affordably, and in full compliance with HMRC requirements.

👉 Get in touch with us today to discuss your options or email hello@elevateadvice.co.uk