Guide 2026
Making Tax Digital for Income Tax 2026: What Every Sole Trader and Landlord Must Do
Making Tax Digital for Income Tax (MTD for ITSA) starts on 6 April 2026. If you are a sole trader or landlord with qualifying income over £50,000 — that is turnover before expenses — you must keep digital records and send HMRC four quarterly updates plus one final declaration using MTD-compatible software. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
- MTD for Income Tax is mandatory from 6 April 2026 for sole traders and landlords whose qualifying income tops £50,000.
- Qualifying income is your gross turnover before expenses, added across self-employment and property — not your profit.
- You must keep digital records and file four quarterly updates plus one final declaration each year, all through HMRC-recognised software.
- The threshold falls to £30,000 in April 2027 and £20,000 in April 2028, pulling in roughly 900,000 more taxpayers.
- —MTD for Income Tax is mandatory from 6 April 2026 for sole traders and landlords whose qualifying income tops £50,000.
- —Qualifying income is your gross turnover before expenses, added across self-employment and property — not your profit.
- —You must keep digital records and file four quarterly updates plus one final declaration each year, all through HMRC-recognised software.
- —The threshold falls to £30,000 in April 2027 and £20,000 in April 2028, pulling in roughly 900,000 more taxpayers.
- —Compatible software runs from free to about £40 a month; a bookkeeper typically adds £30-£75 an hour or £75-£300 a month.
Who has to join MTD for Income Tax in 2026?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest change to how self-employed people and landlords report tax in a generation. It is being phased in by income band, so the date it reaches you depends on how much you turn over.
The key term is qualifying income: your gross income before expenses, added together across all your sole-trader businesses and all your property income. It is not your profit. A plumber turning over £55,000 but keeping only £30,000 in profit is still in the first wave.
| Tax year checked | Qualifying income over | You must join MTD from |
|---|---|---|
| 2024/25 | £50,000 | 6 April 2026 |
| 2025/26 | £30,000 | 6 April 2027 |
| 2026/27 | £20,000 | 6 April 2028 |
HMRC checks the figure on your most recent submitted Self Assessment return. So the return you file by 31 January 2026 (for the 2024/25 year) decides whether you are in the first wave. HMRC writes to affected taxpayers, but the duty to join on time is yours whether the letter arrives or not.
Partnerships and people with qualifying income below £20,000 are not yet in scope. A few groups can apply for exemption — most importantly the digitally excluded (for example no reliable internet, or a disability that makes digital record-keeping impractical).
What actually changes under MTD for Income Tax?
Three things replace the single annual tax return you complete today.
1. Digital record-keeping. Every business and property transaction must be recorded digitally, in software or a spreadsheet linked to software. A shoebox of receipts and a notebook no longer meet the rules.
2. Quarterly updates. Four times a year you send HMRC a running, cumulative total of income and expenses. These are light-touch summaries, not mini tax returns, and no tax is due at those points. The standard deadlines are fixed:
| Quarter covers | Standard filing deadline |
|---|---|
| 6 Apr – 5 Jul | 7 August |
| 6 Apr – 5 Oct | 7 November |
| 6 Apr – 5 Jan | 7 February |
| 6 Apr – 5 Apr | 7 May |
You can elect for calendar quarters (to 30 Jun, 30 Sep, 31 Dec and 31 Mar) if that fits your bookkeeping better; the deadlines stay the same.
3. A final declaration. After the tax year ends you confirm the full picture, add any other income (savings, dividends, employment) and claim reliefs. This replaces your old Self Assessment return and is still due by 31 January the following year. Your tax payment dates do not change either — payments on account and the balancing payment work exactly as now.
Late submissions move to a points-based penalty system: you earn one point per missed deadline, and once you reach the threshold (four points for quarterly filers) a £200 penalty applies, with further £200 penalties for each later default until you clear your record.
What software do you need for MTD?
Paper and standalone spreadsheets are out — unless a spreadsheet is bridged to compatible software. HMRC publishes a list of recognised products, and a handful are free for very simple affairs. Prices below are indicative monthly costs for 2026.
| Software | Rough cost (2026) | Best for |
|---|---|---|
| FreeAgent | Free with some NatWest, RBS or Mettle accounts, otherwise ~£19/mo | Sole traders banking with those groups |
| QuickBooks Sole Trader / Simple Start | ~£10–£16/mo | Trades and small service businesses |
| Xero | ~£16–£33/mo | Businesses that want an accountant-friendly platform |
| Sage Accounting | ~£15–£30/mo | Established small businesses |
| Coconut / freelancer apps | ~£6–£20/mo | Freelancers and single-property landlords |
| Bridging software (e.g. 123 Sheets) | ~£1–£12/mo | People who want to keep a spreadsheet |
For a landlord with one flat, a cheap bridging tool may be all you need. For a busy trade with dozens of transactions a week, a full package that photographs receipts and reconciles your bank feed will save far more than it costs. Do not sleepwalk into a subscription you will not use — but do not under-buy either.
Do you need a bookkeeper for MTD?
Here is the honest part. MTD for ITSA turns one annual chore into a steady, year-round rhythm: four filing windows, digital records that must stay tidy, and software you have to learn. For anyone who currently pulls it together in a single weekend each January, that is a real shift.
Plenty of sole traders and landlords will decide their time is better spent earning and hand the lot to a bookkeeper. A good one keeps your records clean, files the quarterly updates on time, and flags problems early. Typical fees run £30–£75 an hour, or a fixed £75–£300 a month for a straightforward sole trader, depending on transaction volume and whether they also handle your final declaration.
That is also why 2026 is a genuine growth moment for bookkeepers and small accountancy practices. Close to a million newly mandated taxpayers will be searching for local help, and many have never used a bookkeeper before. If you run a practice, a fast, clear website that ranks for your town and answers the MTD question head-on is now one of the best marketing investments you can make. Brightray builds exactly that — a professional website for accountants and bookkeepers for a fixed £500, live in about seven days.
MTD checklist: how to get ready for April 2026
- Check your latest Self Assessment: is your qualifying income over £50,000?
- If yes, plan to be ready before 6 April 2026.
- Choose MTD-compatible software from HMRC's recognised list and start using it now, so you are practised before the deadline.
- Move record-keeping fully digital: bank feeds, receipt capture, the lot.
- Decide whether you file yourself or bring in a bookkeeper or accountant.
- Diarise the quarterly deadlines: 7 Aug, 7 Nov, 7 Feb and 7 May.
If you sell a service to the public, this is also a good moment to sort your own web presence. A sole trader who looks organised online wins more work, and Brightray offers fixed-price sites for tradespeople and professionals with no jargon and no ongoing surprises. See how the fixed-price 7-day website works.
MTD for Income Tax is not optional, and 2026 arrives fast. Get your software and records sorted early, decide who is doing the work, and the quarterly rhythm becomes routine rather than a January scramble.
Asked and answered.
Do I have to join MTD for Income Tax in April 2026?+
Only if your qualifying income was over £50,000, based on your most recent Self Assessment return — the 2024/25 return you file by 31 January 2026. If you are over £30,000 you join in April 2027, and over £20,000 in April 2028. Below £20,000 you are not yet in scope.
Is qualifying income my profit or my turnover?+
It is your gross turnover before expenses, added together across all your self-employment and property income. It is not your profit. You can be well under £50,000 in take-home profit and still be caught by the £50,000 turnover threshold.
Can I still use a spreadsheet under MTD?+
Yes, but only if it is linked to HMRC-recognised bridging software that submits the data digitally. A standalone spreadsheet on its own no longer meets the digital record-keeping rules. Bridging tools start from around £1-£12 a month.
How much does MTD software cost?+
Anywhere from free to about £40 a month. FreeAgent is free with some NatWest, RBS and Mettle bank accounts; QuickBooks, Xero and Sage typically run £10-£33 a month; and cheap bridging software can be a pound or two a month for simple landlord affairs.
Will I still fill in a Self Assessment tax return?+
Not in the old form. The four quarterly updates plus one final declaration replace the annual return. The final declaration is still due by 31 January following the tax year, and your tax payment dates do not change.