Making Tax Digital for Income Tax and Self Assessment (MTD ITSA) Huge change in UK Taxation for Sole Traders & Landlords effective from April 2026

Making Tax Digital for Income Tax: What You Need to Know About MTD for ITSA

From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will become a mandatory requirement for self-employed individuals and landlords across the UK. It does not apply to Limited Companies.

What Is MTD for ITSA?

Making Tax Digital (MTD) is part of HMRC’s long-term strategy to modernise the UK tax system. It aims to make the UK tax system by:

• Providing greater accuracy through digital record-keeping

• Using cloud based platforms for increased efficiency

• Improve HMRC service levels by putting more emphasis on taxpayers and their accountants and tax advisors

MTD for ITSA specifically targets self-employed individuals and landlords from in phased process from April 2026, who will Instead of submitting one Self Assessment tax return per year, be required to:

1. Keep digital records of your income and expenses

2. Submit quarterly updates to HMRC using MTD-compliant software

3. Submit an End of Period Statement (EOPS) and Final Declaration annually

4. So those affected will now be required to make FIVE filings a year to HMRC

   
   

Who Will Be Affected?

From April 2026, MTD for ITSA will apply to:

• Self-employed individuals and landlords with annual business/property income over £50,000

• From April 2027, the income threshold drops to £30,000.

• From April 2028, the income threshold reduces further to £20,000

What is income MTD ITSA

• The key point is that income for MTD ITSA is gross trading / property income or turnover, not profit.

• If the individual has more than one trade and/or property business. i.e, if an individual has £20,000 of rental income and £35,000 of sales from a sole trader business, they will exceed the £50,000 threshold and be mandated into MTD from April 2026.

• When establishing a taxpayers obligations for MTD ITSA for tax year, HMRC will look at the tax return for which the filing deadline fell just before the start of that tax year.

  So 2026/27, being the first tax year for which MTD will be introduced, HMRC will consider the 2024/2025 tax return (filing deadline 31 January 2026).  For 2027/28 they will look at the 2025/26 tax return (filing deadline 31 January 2027) and so on.

  
  

Things to Start Thinking About Now

• Are you above the income threshold?

• Are your records already digital?

• Do you have compatible software in place?

  
  

Final Thoughts and how can FLOW help

• MTD for ITSA is a huge change to the tax system — especially for those individuals who’ve been managing taxes manually or with spreadsheets.

• If you’re unsure whether MTD applies to you or what steps you need to take, we’re happy to guide you through it.

• We can help you review your income sources, recommend compliant software, and build a plan to keep your tax affairs smooth and stress-free.

• You can book a initial free and no obligation consultation meeting with our head of tax here Making Tax Digital Free Consultancy