Making Tax Digital for Income Tax: what sole traders and landlords need to do
From April 2026 many self-employed people and landlords must keep digital records and report to HMRC quarterly. Here is who is affected and how to prepare.
Making Tax Digital for Income Tax is the biggest change to self assessment in a generation. It replaces the single annual tax return with digital record keeping and quarterly updates to HMRC.
Who is affected, and when
| From | Qualifying income (self-employment plus property, before expenses) |
|---|---|
| 6 April 2026 | Over £50,000 |
| 6 April 2027 | Over £30,000 |
| 6 April 2028 | Over £20,000 |
HMRC look at the income shown on your tax return two years earlier, so the 2024/25 return decides whether you join in April 2026. Limited companies are not affected; their directors are only caught if they also have self-employment or rental income above the threshold.
What you will have to do
- Keep digital records of income and expenses in HMRC-recognised software or a compatible spreadsheet.
- Send a quarterly update to HMRC within a month of each quarter end. These are summaries, not full returns, and there is no tax to pay with them.
- Submit a final declaration by 31 January after the tax year, which replaces the current tax return and confirms the figures.
Payment dates do not change: tax is still due on 31 January, with payments on account on 31 January and 31 July.
How to get ready
- Check your 2024/25 income against the £50,000 threshold.
- Open a separate business bank account if you do not already have one. It makes digital bookkeeping far simpler.
- Choose software now and start keeping records in it before April, so the first quarter is not a scramble.
- Decide whether you will do the quarterly updates yourself or have us do them with your bookkeeping.
We are setting clients up throughout the year. If you think you are affected, talk to us and we will confirm your position and the simplest way to comply.
This article is a general guide based on the rules as we understand them at the date of publication. It is not advice for your specific circumstances. Please speak to us before acting on anything in it.
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Tell us a little about your business and we will come back to you within one working day with how we can help and what it will cost. Or speak directly to Craig, our senior partner, on 07949 534119.