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Making Tax Digital for Income Tax Self Assessment: What Landlords and Sole Traders Need to Know for 2026

  • Writer: Scott Pheby
    Scott Pheby
  • Oct 7
  • 3 min read

The government’s Making Tax Digital (MTD) programme is transforming how millions of people and businesses report their income to HMRC. The next major phase, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), will come into effect from April 2026.


If you’re a sole trader or landlord, this change will directly affect how you manage and submit your tax information. Here’s what you need to know to get ready.


What Is Making Tax Digital for Income Tax?


Making Tax Digital is part of HMRC’s plan to modernise the UK tax system. It replaces the traditional annual Self Assessment tax return with digital record-keeping and quarterly updates submitted online through compatible accounting software.


The aim is to make tax administration more accurate, efficient, and less prone to error.


Who Will Be Affected from 2026 Onwards?


From 6 April 2026, MTD for ITSA will apply to:


  • Self-employed individuals (sole traders)

  • Landlords with UK property income


However, only those with combined business and/or property income over £50,000 will be required to join the scheme in 2026.


From April 2027, the threshold will lower to include those with income over £30,000.


What Will Change Under MTD for ITSA?


Under the new system, you will no longer submit one annual Self Assessment tax return. Instead, you’ll need to:


  1. Keep digital records of all income and expenses.

  2. Send quarterly updates to HMRC through approved MTD-compatible software.

  3. Submit an End of Period Statement (EOPS) after the tax year ends to finalise income for each business.

  4. Submit a Final Declaration, confirming total income (including any employment or savings) and tax owed.


This means at least six submissions per year, compared with just one annual return today.


What Software Will You Need?


You must use HMRC-approved accounting software that supports MTD for Income Tax. Popular options already preparing for compliance include:


  • Xero

  • QuickBooks

  • FreeAgent

  • Sage


If you currently keep manual records or spreadsheets, you’ll need to move to a digital system before April 2026.


Benefits of Going Digital


While MTD may seem like extra admin, there are real advantages:


  • Fewer errors thanks to automation and real-time updates

  • A clearer picture of your tax position throughout the year

  • Easier bookkeeping and better financial visibility

  • Reduced stress at year-end


Businesses already using digital tools for VAT have found it simplifies reporting and saves time.


How to Prepare Now


Even though April 2026 might sound far away, getting ready early will save you a lot of hassle later. Here’s how to start:


  1. Review your income levels to confirm if you’ll be affected.

  2. Choose MTD-compatible software and start using it now.

  3. Digitise your records – stop relying on paper receipts and spreadsheets.

  4. Speak to your accountant about quarterly reporting requirements.

  5. Plan for training or support if you manage your own accounts.


Final Thoughts


Making Tax Digital for Income Tax will be one of the biggest changes to self-employed taxation in decades. While it adds new reporting requirements, it also offers the opportunity to modernise your record-keeping and stay on top of your finances throughout the year.


At Highway 61, we help sole traders and landlords transition smoothly to MTD-compliant systems, from choosing software to managing quarterly submissions.


Need help getting ready for MTD? Contact Highway 61 today to discuss how we can help you prepare for the 2026 changes with confidence.

 
 
 
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