Making Tax Digital (MTD) for Income Tax is the biggest change to personal tax in a generation. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send HMRC quarterly updates using compatible software, instead of one annual Self Assessment return. If that's you, the time to prepare is now — not next January.
Who has to comply, and when
MTD for Income Tax is being phased in by income level. "Qualifying income" means your gross income (turnover) from self-employment and property before expenses — not your profit.
- From April 2026 — sole traders and landlords with qualifying income above £50,000
- From April 2027 — those with qualifying income above £30,000
- From April 2028 — the threshold is expected to fall further, to around £20,000
If your combined self-employment and rental income is below the threshold for now, you can carry on with normal Self Assessment — but it's worth planning ahead, because the thresholds keep coming down.
What actually changes
Under MTD for Income Tax you'll need to:
- Keep digital records of your income and expenses in HMRC-recognised software (spreadsheets alone won't meet the rules unless bridged by compatible software).
- Send four quarterly updates a year to HMRC — a running summary of your income and expenses.
- Submit a final declaration after the tax year ends, which replaces your old Self Assessment return and confirms your final figures and any other income.
So the single annual return becomes five submissions a year. It's more frequent, but if your bookkeeping is already up to date, each one is quick.
What you should do now
- Check whether you're in scope — add up your self-employment and property income for the last full tax year.
- Get onto compatible software early — moving your records across mid-year is harder than starting clean.
- Keep your bookkeeping current — the whole system assumes your records are up to date each quarter, not reconstructed at year end.
How Haral helps
We've already moved our affected clients onto HMRC-recognised software and handle all four quarterly updates plus the final declaration on their behalf. If you'd like us to confirm whether MTD for Income Tax applies to you and take the whole process off your plate, book a free consultation.
This article is general information, not personal tax advice. Thresholds and rules can change — check the latest position with HMRC or speak to us about your circumstances.