Making Tax Digital for Landlords and Sole Traders: What's Actually Changing

I get asked about Making Tax Digital more than almost anything else at the moment, usually with a slightly worried tone attached. So let me say this first. If you're a sole trader or a landlord, this is a change in how you report, not a change in how much tax you owe. It's worth understanding properly, and it's worth preparing for early, but it is not something to panic about.

Here's where things actually stand, as of August 2026.

What Making Tax Digital for Income Tax actually is

Making Tax Digital for Income Tax Self Assessment, usually shortened to MTD for ITSA, is HMRC's replacement for the old once-a-year Self Assessment tax return. Instead of gathering everything up in January and filing one return, you keep digital records throughout the year and send HMRC updates through compatible software as you go. The idea is fewer surprises and fewer end-of-year scrambles. In practice, it means more regular contact with your numbers, not less.

Who it applies to, and when

MTD for ITSA applies to sole traders and landlords registered for Self Assessment whose qualifying income, that's your total income from self-employment and property combined, is above the relevant threshold. HMRC works this out from the Self Assessment return you've already filed and writes to tell you if you're in scope.

The rollout is phased by income:

• Over £50,000 (based on your 2024-25 tax year figures): in scope from 6 April 2026. This threshold is already live. If this is you, your first quarterly update, covering April to June, was due by 7 August 2026.
• Over £30,000 (based on your 2025-26 figures): in scope from 6 April 2027.
• Over £20,000 (based on your 2026-27 figures): in scope from 6 April 2028.

If your income sits below £20,000, you're not required to join at this stage, though that could change in future. If you're a landlord with a mix of rental and self-employed income, both count towards the same threshold, which catches some people out.

What it actually requires in practice

This is the part people find harder to picture, so let me set it out plainly. Once you're in scope, you need to do four things.

• Keep digital records. Income and expenses recorded in compatible software as you go, not reconstructed from a shoebox of receipts in January.
• Send quarterly updates. Four times a year, a running summary of your income and expenses goes to HMRC through your software. For the standard tax year, deadlines fall on 7 August, 7 November, 7 February and 7 May.
• Submit an End of Period Statement. Once the year's four updates are in, you confirm the final figures for each business or property source, making any adjustments needed.
• File a Final Declaration. This replaces the old Self Assessment return. It's where you confirm everything is complete and correct, and add anything not already covered, employment income, dividends, pension details, Capital Gains Tax. It's due by 31 January after the tax year ends, the same deadline you already know.

So the annual deadline you're used to hasn't moved. What's new is the quarterly rhythm that leads up to it.

What to actually do about it

If you're already above £50,000, you should be in the system now, and getting comfortable with the quarterly cycle is the priority. If you're heading towards £30,000 or £20,000, you have real time, and real time is worth using.

• Start keeping digital records now, even before you're required to. Waiting until your first mandatory quarter to sort out how you record income and expenses is the hard way to do this.
• Get compatible software in place and make sure it's actually set up for your situation, not just installed and left. A spreadsheet won't cut it under MTD unless it's bridged through recognised software.
• Talk to an accountant about the transition before your first quarter is due, not during it. There's a real difference between software that files something and software, and support, that helps you understand what it's telling you.

This is where I'd flag Accountability, one strand of the CAPID framework this practice runs on. Deadlines owned, not chased. Quarterly filing rewards exactly that habit, and punishes the opposite. You can read more about how CAPID shapes the way I work on the Method page.

Four filings a year isn't more work if you're already keeping proper records. It's only a burden if you were never keeping them properly in the first place.

I'm not going to pretend every part of this rollout has gone smoothly, HMRC's own timeline has shifted before, and software readiness varies. But the direction is settled now, and the sensible move is the same whichever threshold band you fall into: get your records digital, get the right software, and get advice before your first deadline lands rather than after.

If you want to talk through where you sit in this and what it means for you specifically, book a free discovery call and we'll go through it properly.