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Robert Black Robert Black • Feb 26 • 3 min read

MTD for Income Tax: What Sole Traders and Landlords Need to Know Before April 2026

HMRC MTD for Income Tax

The government’s Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) programme is moving ahead and will transform how sole traders and landlords report their income. With the new requirements beginning in April 2026, now is the time to understand what’s changing and how to prepare.

What Is MTD for Income Tax?

MTD for ITSA is HMRC’s new digital reporting system. Under HMRC’s MTD ITSA requirements, instead of filing one annual Self‑Assessment return, taxpayers will now need to:

  • Keep digital accounting records.
  • Use MTD‑compatible software.
  • Submit quarterly updates to HMRC.
  • Complete a year‑end tax return.

Paper records will no longer meet HMRC requirements once you fall within the scope.

Who Will Be Affected?

MTD for ITSA applies to individuals with gross income (not profit) from:

  • Self‑employment, and/or
  • UK or overseas property

The thresholds apply to the combined total of all qualifying income sources.

From 6 April 2026

Mandatory for individuals with over £50,000 in combined gross self‑employment and/or property income.

From 6 April 2027

Mandatory for those with over £30,000 in qualifying income.

Why This Matters — and Why You Should Prepare Early

MTD introduces:

  • More frequent reporting
  • Stricter digital record‑keeping
  • Mandatory software use
  • New deadlines and processes

Digital Record‑Keeping Rules

  • You must keep digital records of each individual transaction. Paper receipts may still be stored, but the financial data must also be captured in a digital format. Spreadsheets are permitted, provided they link directly to MTD‑compatible software.

Quarterly Reporting

Quarterly updates will be required for standard quarters, irrespective of a business’s accounting period.

  • 6 April – 5 July
  • 6 July – 5 October
  • 6 October – 5 January
  • 6 January – 5 April

To comply with MTD ITSA requirements, quarterly reporting must be completed by the 7th of the month following the end of the relevant quarter.

Year‑End Requirements

Once the fourth quarterly update is filed, MTD rules require you to complete a:

  • Business Source Adjustable Summary (BSAS) – This involves the software retrieving the totals from the final quarterly update submission from HMRC systems. After the data is retrieved, the process applies all essential accounting and tax adjustments to prepare accurate figures for submission to HMRC.
  • Final Declaration – For the Final Declaration, the system combines the MTD income information with the taxpayer’s other income and any relief claims to produce the complete tax return.

The first Final Declaration under MTD (for 2026/27) will be due 31 January 2028.

How We Can Help

We’re here to make your transition to MTD smooth, compliant, and stress‑free. Our services include:

  • Setting up fully compliant digital record‑keeping systems
  • Advising on and implementing MTD‑compatible software
  • Managing quarterly submissions on your behalf
  • Providing ongoing bookkeeping and tax support

If you’re a sole trader, a landlord, or both, our service helps you stay ahead of MTD ITSA requirements and maintain seamless tax compliance.

Robert Black

Black Acre Rural Limited

rblack@black-acre.co.uk

07595 662661

www.black-acre.co.uk