16. August 2026

Making Tax Digital for Income Tax: 2026 Guide for Sole Traders & Landlords

Article written by SOS Accounting Ltd in the category Sole Traders and Landlords

If you've heard about Making Tax Digital for Income Tax (MTD for ITSA) and aren't quite sure what it means, you're not alone.

From April 2026, many sole traders and landlords will need to keep digital records and send regular updates to HMRC using compatible software. It sounds like a big change, but once it's set up, it can actually make keeping on top of your tax much easier.

Here's what you need to know.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is HMRC's new way of collecting information from self-employed people and landlords.

Instead of waiting until January to submit one annual Self Assessment tax return, you'll keep digital records throughout the year and submit updates every quarter using approved software.

You'll also complete a final declaration after the tax year to confirm your overall tax position.

Who needs to comply?

The rollout is happening in stages based on your annual qualifying income.

6 April 2026 > Over £50,000
6 April 2027 > Over £30,000
6 April 2028 > Over £20,000

If you're below these thresholds, you won't need to join yet.

What counts as qualifying income?

Qualifying income is your gross income (before expenses) from:

Sole trader businesses
UK property rental income
Overseas property income (where applicable)

Income from employment, pensions and most investment income doesn't count towards the MTD threshold.

How often will you need to report?

You'll submit four quarterly updates each tax year.

6 April – 5 July
6 April - 5 October
6 April - 5 January
6 April - 5 April

These updates simply give HMRC a summary of your income and expenses—they aren't your final tax calculation.

Don't forget the final declaration

After your quarterly updates, you'll still need to submit a Final Declaration.

This confirms your complete tax position for the year, including any other taxable income, reliefs and adjustments.

The deadline remains 31 January following the end of the tax year.

Do I need special software?

Yes. HMRC requires you to use MTD-compatible software.

Software such as Xero can help you:

Keep digital records in one place
Automatically import bank transactions
Store receipts digitally
Submit quarterly updates to HMRC
Stay organised throughout the year

The right software means less paperwork and fewer last-minute scrambles before deadlines.

How to prepare now

If you'll be affected, it's worth getting ready before your start date.

Switch to digital record keeping.
Keep receipts and invoices organised.
Check whether your income exceeds the threshold.
Make sure your HMRC details are up to date.
Choose compatible accounting software.

Getting everything set up early makes the transition much smoother.