For many the end of the tax year is an anxiety-provoking time. From getting all your receipts and invoices in order to ensuring that you’ve filled out your Self Assessment form correctly, it can be a challenge for many sole traders and landlords. But, Making Tax Digital for Income Tax is on the horizon – and if you’re a sole trader or landlord earning over £50,000, it’s time to prepare. From April 2026, HMRC will require quarterly digital tax reporting, marking the end of traditional Self Assessment returns for many. Here’s what you need to know, how to get ready and what Making Tax Digital means for you.
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is part of HMRC’s long-term strategy to modernise the UK tax system, making it more efficient, accurate, and easier for taxpayers to manage. Specifically, Making Tax Digital for Income Tax—also referred to as MTD for ITSA (Income Tax Self Assessment)—will require eligible individuals to maintain digital records and send quarterly income and expense summaries to HMRC using MTD-compatible software.
Instead of filing one tax return annually, you’ll now need to:
- Submit updates every quarter
- Complete an End-of-Period Statement (EOPS)
- File a Final Declaration (similar to the current Self Assessment)
This digital-first approach is intended to reduce errors and give you better visibility over your tax obligations throughout the year and eliminate that end of tax-year dread.
Who is Affected from April 2026?
From April 2026, MTD for Income Tax becomes mandatory for:
- Sole traders with qualifying income over £50,000
- Landlords with property income over £50,000
- Individuals who combine self-employment and rental income exceeding £50,000
Qualifying income refers to gross income, not profit. If you earn £30,000 from self-employment and £25,000 in rental income, your total qualifying income is £55,000 – meaning this also applies to you.
To check if you meet the threshold:
- Add your gross self-employed and property income
- Compare the total against the £50,000 threshold
- If over, you’ll need to comply with MTD from April 2026
If your income fluctuates around the threshold, speak to a professional for tailored advice. Our tax accounting services can help assess your obligations accurately.
What Changes from April 2026?
Under Making Tax Digital for Income Tax, the traditional Self Assessment process will change significantly for affected individuals so it is important that you’re up to speed. Here are what the changes involve:
- Quarterly Digital Submissions
Every three months, you’ll need to submit a digital summary of your income and allowable business expenses to HMRC using approved software. These updates give HMRC a near real-time view of your earnings.
- End-of-Period Statement (EOPS)
At the end of your accounting period, you’ll confirm that your quarterly summaries are complete and make any necessary adjustments, such as accounting for capital allowances.
- Final Declaration
This replaces the current Self Assessment tax return. It finalises your tax position by confirming all income sources and claiming any reliefs you’re entitled to.
Our self employed accounting team can guide you through these new reporting responsibilities and ensure nothing is missed.
Practical Steps to Prepare for MTD for ITSA
If you’re a sole trader or landlord earning over £50,000, don’t wait until 2026 to act. Here’s how to prepare:
- Review Your Income
Check your gross self-employment and property income for the current and previous tax years. If you’re consistently over the £50,000 mark, you’ll likely need to comply with MTD.
- Start Digital Record-Keeping Now
Begin keeping digital records of your income and expenses using MTD-compatible software. Starting now gives you time to adapt and fix any issues before compliance becomes mandatory.
Need help choosing software? Our payroll accounting experts can recommend integrated solutions that cover payroll, expenses, and quarterly reporting.
- Understand What Can Be Claimed
Make sure you’re correctly recording allowable expenses. Incorrect claims are one of the most common reasons for HMRC penalties. A professional accountant can help you maximise deductions without crossing compliance lines.
- Speak to a Tax Advisor
Navigating Making Tax Digital for Income Tax doesn’t have to be overwhelming. A qualified tax advisor can assess your situation, recommend the right software, and handle submissions on your behalf.
Our tax preparation services extend beyond companies— here at Kirkwood Wilson, we also support sole traders and landlords with personalised guidance.
The Bigger Picture: Why MTD is Being Introduced
If you’ve got your head around Self Assessment forms and feel confident when the end of the tax year comes round, then you may be wondering why this is being introduced. Largely, this is HMRC trying to modernise and digitise the tax system, and therefore, making it easier for people to keep on top of all year round. Its main goals include:
- Reducing tax return errors
- Increasing efficiency and accuracy
- Helping individuals stay on top of their tax obligations
By requiring more frequent reporting, HMRC also aims to make tax more manageable and less stressful by avoiding end-of-year surprises.
Though the shift to digital reporting is significant, it offers long-term benefits like improved financial visibility and fewer errors. It’s also an opportunity to streamline your accounting processes and save time in the long run.
Don’t Wait – Act Now and Stay Compliant
April 2026 may seem far off, but preparing early is key to avoiding disruption – and penalties. Review your income, start using digital software, and seek advice from a professional.
Speak to one of our expert tax advisors today to make sure you’re MTD-ready. Whether it’s self employed accounting, payroll accounting, or help understanding tax codes for your employees, Kirkwood Wilson is here to help.
