Making Tax Digital (MTD) has already changed how VAT works, and it's now reshaping Income Tax for the self-employed and landlords. If that's you, here's what's coming and how to be ready rather than caught out.

What is MTD for Income Tax?

MTD for Income Tax Self Assessment (often shortened to MTD for ITSA) replaces the once-a-year tax return with a more continuous, digital system. Instead of one annual submission, affected taxpayers will:

  • Keep digital records of income and expenses using compatible software.
  • Send HMRC a quarterly update of their figures.
  • Submit a final declaration after the tax year end to confirm everything and settle the bill.

Who is affected, and when

The rollout is happening in stages, based on your gross income from self-employment and property:

  • From April 2026 - sole traders and landlords with income over £50,000.
  • From April 2027 - those with income over £30,000.
  • From April 2028 - those with income over £20,000 (as announced).

It's based on turnover, not profit - so it's your total business and rental income that counts, before expenses.

What it means in practice

The headline change is that shoebox-of-receipts, once-a-year accounting no longer works. You'll need:

  • Digital bookkeeping kept up to date through the year, not reconstructed in January.
  • MTD-compatible software connected to your bank.
  • To think about your numbers quarterly rather than annually.

For anyone already keeping digital records, this is barely a change. For those still on spreadsheets or paper, it's the nudge to modernise - and honestly, it makes running your business easier, not harder.

How to get ready now

  1. Check whether you're in scope and from which date.
  2. Move to digital bookkeeping well before your start date, so it's second nature by the time quarterly updates begin.
  3. Get your document and receipt uploads set up so records stay current automatically.
  4. Talk to an accountant who can handle the quarterly submissions for you.

We'll make MTD a non-event

At TaxMag we get clients onto BookEnu - free for every client - with MTD-ready bookkeeping early, and handle the quarterly and final submissions, so the switch is smooth and you stay fully compliant. If you're a sole trader or landlord wondering how MTD affects you, get in touch and we'll walk you through it.

This article is general information, not tax advice. MTD timings and thresholds can change - talk to us for guidance on your situation.