Big changes are coming to how sole traders and landlords report income to HMRC. From April 2026, Making Tax Digital for Income Tax (MTD for IT) will kick in, gradually replacing the annual Self-Assessment tax return with digital record-keeping and quarterly updates.

Who will it apply to and when?

If you’re self-employed or earn income from property (like renting out a flat), and your total income (before expenses) hits the following thresholds, MTD for IT will apply:

• From April 2026: Income over £50,000
• From April 2027: Income over £30,000
• From April 2028: Income over £20,000

HMRC will contact you when you need to join. Qualifying income includes everything you earn before expenses from self-employment and property, and may include VAT if it’s reported on your tax return.

What will you need to do?

If you’re affected, you’ll need to:

• Use MTD-compatible software to keep digital records
• Submit quarterly updates of your income and expenses to HMRC
• File a final digital return each year (including other income like employment or savings)

Important: You won’t have to pay tax quarterly. The usual deadlines still apply:
31 January (main payment) and 31 January / 31 July (payments on account, if required).

Joint property ownership

For jointly owned properties, you can report income and expenses as single total figures each quarter. Mortgage interest and finance costs must still be recorded separately.

What if you already file VAT returns?

MTD quarters will usually end on:

• 5 July, 5 October, 5 January, and 5 April. Or optionally:
• 30 June, 30 September, 31 December, and 31 March

If your VAT periods don’t match, it may be worth adjusting your VAT return dates so both sets of submissions align.

What happens if I don’t comply?

HMRC plans to introduce new penalties for late updates or not using digital records, including fines of up to £3,000 per quarter. Full penalty details are still to come.

What can you do now?

• Get familiar with the software – we can help you choose and set it up
• Join the HMRC testing programme – it’s penalty-free and gives you time to get used to the new process
• Talk to us – we’ll help you prepare and make the switch as smooth as possible