Making Tax Digital for Income Tax: what sole traders and landlords must do

Making Tax Digital for Income Tax is the biggest change to how the self employed and landlords deal with HMRC in a generation. If your income is high enough, the familiar once a year Self Assessment is being replaced by digital records and quarterly reporting. Here is what is actually changing, who it affects, and how to make the switch painless.

What is changing

Instead of filing a single Self Assessment return each year, those in scope will keep their income and expense records digitally and send HMRC a short summary every quarter, followed by a final declaration that pulls the year together. The aim is more frequent, more accurate reporting, but for most people it simply means a new rhythm to get used to.

Who has to do it, and when

It is being phased in by income level. From 6 April 2026 it applies to sole traders and landlords whose qualifying income is over £50,000. From April 2027 the threshold drops to £30,000, and from April 2028 to £20,000. Qualifying income means your gross income from self employment and property added together, before any expenses, so it is your turnover and total rent, not your profit. HMRC works out who is in scope from your most recent Self Assessment return.

The new quarterly rhythm

Once you are in, you send HMRC four updates a year, due by 7 August, 7 November, 7 February and 7 May. These are summaries of your income and expenses for the quarter, not full tax returns. After the fourth quarter you submit a final declaration, confirming the year and any other income, and pay any tax due by the usual 31 January deadline. Nothing changes about when you pay; what changes is how often you report.

You will need the right software

This is the part that catches people out. HMRC does not provide software, and the old online filing route does not support these submissions. You need software that is recognised for Making Tax Digital, such as the cloud accounting tools many businesses already use, connected directly to HMRC. If you are still on spreadsheets or paper, this is the moment to move across.

A softer first year, but do not wait

HMRC has confirmed a softer landing for the first group, with no penalty points for late quarterly updates during the opening year. That is helpful, but it is not a reason to leave it late. Late payment charges still apply, and the threshold keeps falling, so most sole traders and landlords will be brought in over the next few years. The businesses that cope best are the ones that move to digital records early and build the quarterly habit before it is forced on them.

Are you exempt?

Some people are exempt, for example if they are digitally excluded, and there are temporary exemptions for certain situations such as some non residence and trust scenarios. If you think an exemption might apply to you, it is worth checking properly rather than assuming, because the rules are specific.

How we make it a non event

Our job is to take the whole thing off your plate. We check exactly when MTD applies to you, set you up on the right HMRC recognised software, keep your records current, and file every quarterly update and the final declaration for you, on time. You get the benefit of always current numbers and none of the admin. If you would like to get ahead of it calmly, our Making Tax Digital for Income Tax service is built for exactly this, and it pairs naturally with bookkeeping and Self Assessment.

The change is real, but it does not have to be stressful. Start early, get onto digital records, and let someone handle the quarterly rhythm for you.

This article is general information, not personal advice, and tax rules change over time. For guidance on your own circumstances, get in touch.

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