Making Tax Digital 2026 changes: what sole traders and landlords need to do now

If your self-employment or rental income is over £50,000, Making Tax Digital for Income Tax (MTD ITSA) applies to you from 6 April 2026. That is the first date HMRC will expect quarterly digital updates instead of an annual Self Assessment return.

There is no soft launch. If your first quarter starts on 6 April 2026, your first digital update is due by 7 August 2026. This is a short guide to what to do between now and then.

First: work out if you are actually in scope

MTD ITSA is triggered by gross income, not profit, and it combines self-employment and property. Add together:

• Turnover from any sole trader activity (before expenses).
• Rental income from any UK or overseas property you own personally.

If the total for the 2024/25 tax year is over £50,000, you are in from April 2026. If it is over £30,000, you are in from April 2027. Over £20,000 puts you in from April 2028.

Dividends, employment income, interest and pension income do not count towards the threshold. Neither does anything trading through a limited company.

Six things to do before April 2026

1. Move onto cloud accounting software

If you are still on spreadsheets or paper, this is the change that takes the longest. Xero, QuickBooks and FreeAgent all support MTD ITSA. Give yourself a full tax year on the new software before MTD goes live so the workflow is second nature by then.

2. Connect your bank feeds

MTD works because the software pulls transactions from your bank automatically. Set up bank feeds now and get into the habit of categorising transactions weekly. This is the single biggest predictor of whether quarterly filing feels easy or painful.

3. Separate personal and business spending

If your rental income and personal current account share the same bank, untangling four times a year is miserable. A dedicated business or property account per income stream saves hours every quarter.

4. Digitise the paperwork

Receipts, invoices and rental statements need to be stored digitally. Tools like Dext and Hubdoc plug directly into Xero and QuickBooks so a photo of a receipt lands in the right place automatically. This is also what makes an HMRC enquiry a two-day job rather than a two-week one.

5. Get your 2024/25 return filed early

The Self Assessment return you file by 31 January 2026 is the last "normal" one for anyone in the £50,000+ band. File it early, use it as a stress test for how clean your records are, and fix anything that came up before MTD starts.

6. Decide who is filing the updates

Someone has to press submit every three months. If that is you, block time in the diary for the week after each period ends (early May, August, November, February). If it is your accountant, agree the workflow now, not in April.

Landlord-specific quirks

• Each property business (UK, overseas, furnished holiday lets while the regime lasts) is a separate MTD submission.
• Joint ownership means each owner reports their share, not the whole property.
• If you own property through a partnership, the partnership itself will come into MTD on a later, staged date - individual partners still track their share.

What we are doing for clients

For clients over the £50,000 threshold we are moving everyone onto MTD-ready software during 2025, running a full "practice year" of quarterly bookkeeping through 2025/26, and pre-registering with HMRC so the first live quarter in 2026 is uneventful. If you would like to do the same, book a call and we will walk through the plan for your setup.

Also useful: what MTD for Income Tax actually is and our Making Tax Digital package.