Making Tax Digital – The Countdown
If you’re self-employed or are a landlord, you should be aware of the changes coming for Making Tax Digital for Income Tax. The rollout is set to start in 2026. Are you prepared? Essendon are here to help.
About Making Tax Digital for Income Tax (MTD IT)
As we edge closer to April 2026, Making Tax Digital for Income Tax (MTD IT) represents one of the most significant shifts in UK tax reporting for sole traders and landlords in decades. While MTD has already transformed VAT reporting, the extension to Income Tax Self Assessment will change how businesses keep records and submit tax information. If you are a sole trader or a landlord, you’ll have to move away from the familiar annual Self-Assessment return to a digital, quarterly reporting model.
MTD IT: Outline What Changes are Coming
From 6 April 2026, taxpayers with gross income over £50,000 from self-employment and/or property will be required to:
- Keep digital records of income and expenditure;
- Use HMRC-recognised software to manage those records; and
- Submit quarterly summary updates to HMRC throughout the year.
Rather than waiting until January to disclose your full year’s profit and tax due, MTD IT means reporting regularly so HMRC has a “real-time” picture of your finances. Further phases follow in April 2027 (£30,000 threshold) and April 2028 (£20,000 threshold).
Although quarterly updates are new, payment deadlines (such as the 31 January balancing payment) will still be the same.
Handling MTD IT: What Sole Traders and Landlords Must Do Now
To prepare for MTD IT, you should start by
1. Evaluating your income position:
First, you need to work out whether your gross qualifying income (before expenses) from self-employment and/or property will trigger the threshold of £50,000 in 2026/27. The threshold is set to change annually, so if you don’t qualify this year, you will still need to check next year.
2. Selecting a suitable software:
MTD IT requires digital record-keeping and submission via compatible software. If you don’t already use one (or your current tool isn’t approved), you’ll need to choose and begin using one well before April. Essendon can help you select the best tool for your business, so contact us if you would like some advice.
3. Registering with HMRC:
You must sign up for MTD IT in advance, link your Government Gateway credentials, and authorise your software to interact with HMRC. This is relatively simple to do online.
4. Transitioning your record-keeping:
Start logging income and expenses digitally now. This way, you will get ahead and build a habit for your quarterly reporting.
Your Checklist to Prepare for MTD IT
To prepare for MTD IT, you should:
- Confirm income thresholds to see if/when you’re in scope.
- Choose and set up MTD-compatible software.
- Sign up for MTD IT with HMRC and authorise software access.
- Digitise historical records to ensure continuity
- Plan quarterly reporting dates in your annual workflow.
- Review bookkeeping processes to fit digital obligations.