Making Tax Digital for Income Tax: What Sole Traders and Landlords Need to Know

Making Tax Digital for Income Tax is now underway, bringing a new way for sole traders and landlords to keep records and report their income to HMRC.

If you are wondering whether it affects you, what software you need or how much extra work is involved, you’re in good company.  Tax changes can feel like another job on an already busy to-do list.

At Blue Leaf Accounting, we’re here to explain the requirements in plain English and help you build a routine that works for you.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax, sometimes (unhelpfully) called MTD ITSA, means keeping digital records of your self-employment and property income and expenses, sending quarterly updates to HMRC, and completing your annual tax return through compatible software.

The quarterly updates are summaries of your records. You’ll still need to review and finalise your tax position after the end of the tax year.

Who Needs to Use It, and When?

MTD for Income Tax is being introduced in stages:

These rules apply to sole traders and landlords who meet the requirements, unless an exemption applies. Partnerships will be brought into MTD for Income Tax in the future, but HMRC has not yet set their start date.

What Does “Qualifying Income” Mean?

For most people, qualifying income is your total income from self-employment and property before deducting expenses. It’s about turnover and rental income, rather than the profit you keep.

If you have more than one business, or receive both business and rental income, you need to add the relevant amounts together.

For example, £38,000 of self-employment income plus £15,000 of rental income gives you qualifying income of £53,000. If those were your figures for 2024/25, you would normally have needed to start MTD from April 2026.

Employment income, dividends and pensions do not count towards this threshold, although they may still need to be included in your annual tax return.

What Will You Need to Do?

1. Keep Digital Records

You’ll need digital records of your business or property income and expenses.

This could mean using accounting software or continuing with spreadsheets connected to suitable bridging software, which allows information to be submitted to HMRC. A spreadsheet on its own won’t meet all the requirements.

The right setup depends on your business, your income sources and how you prefer to work. We can help you choose software that supports the tasks you need, without paying for features you won’t use.

2. Send Quarterly Updates

Every three months, your software is used to produce digital records as a summary for HMRC. You need updates for each separate self-employment and property business.

The updates are cumulative: each one covers the year so far. The standard timetable is:

Calendar periods ending on 30 June, 30 September, 31 December and 31 March are also available, with the same submission deadlines.

You don’t need to make all your year-end accounting and tax adjustments before sending each update. However, keeping your records organised throughout the year will make the process easier.

3. Complete Your Annual Tax Return

After the tax year ends, you’ll still need to check your figures, make any necessary adjustments and include your other taxable income and gains.

You then submit your annual tax return through MTD-compatible software by 31 January following the end of the tax year. For 2026/27, that means 31 January 2028.

If you’ve seen older guidance mentioning a separate “End of Period Statement”, that requirement has been removed. The year-end process now centres on completing and submitting your tax return.

Will You Have to Pay Tax Quarterly?

Not at the moment. Quarterly reporting does not introduce quarterly tax payments. However, we could end up there in the future.

MTD for Income Tax does not change your existing tax payment dates. Your usual Self Assessment payment arrangements, including payments on account where applicable, continue.

You’ll also still need to submit your usual Self Assessment return for the tax year before you join MTD. If you started MTD in April 2026, your 2025/26 online return remains due by 31 January 2027.

Will It Help You Understand Your Tax Bill?

Keeping your records up to date can give you a clearer picture of your income and spending, and help you plan how much to set aside.

After submitting quarterly updates, you can access an estimated tax bill. Treat this as a guide: other income, reliefs and year-end adjustments can change the final amount.

What If Digital Reporting Is Difficult for You?

Some people can qualify for an exemption, including where they are digitally excluded. Your eligibility depends on your circumstances, and you may need to apply to HMRC.

If you’re concerned about meeting the digital requirements, speak to us so we can help you understand the options. An MTD exemption does not remove your usual Self Assessment obligations.

Your Practical MTD Checklist

There’s no need to tackle everything at once. Start with these steps:

• Check your start date. Review your qualifying income for the relevant tax year.
• Review your current records. Identify what’s already digital and what needs organising.
• Choose a suitable setup. Make sure your software can support your income sources and required submissions.
• Check your sign-up arrangements. Don’t assume that having accounting software means you’re registered for MTD.
• Agree who does what. Decide who will maintain the records, check the figures and submit the updates.
• Build a regular routine. A little bookkeeping each week or month can make quarterly deadlines much more manageable.
• HMRC may write to you about joining MTD, but you’re still responsible for checking whether the rules apply even if you haven’t received a letter.

How Blue Leaf Accounting Can Help

At Blue Leaf Accounting, we’ll help you turn the new requirements into a clear, manageable process.

We can help you:

• Understand whether MTD applies to you and when.
• Choose and set up suitable software.
• Organise your bookkeeping and build confidence using digital records.
• Prepare and submit quarterly updates.
• Review your year-end figures and complete your annual tax return.

We’ll agree the support you need and explain what you’ll need to provide, so everyone knows what happens next.

Let’s Make MTD Manageable

Whether you’re already using MTD or preparing for a later start date, having the right setup and support can make a real difference.

Get in touch with Blue Leaf Accounting to check where you stand and put a practical plan in place. We’ll guide you through the requirements, answer your questions and help you stay on top of the deadlines.

Updated October 2026.