Making Tax Digital for Income Tax (MTD for ITSA) is the biggest change to self-assessment since it moved online — and it started this April. If you’re a sole trader or landlord, here’s what’s changed, who’s affected and when, and what you need to do about it.

What actually changed in April 2026?

From 6 April 2026, sole traders and landlords with combined gross income from self-employment and property over £50,000 must:

  • Keep digital records of business income and expenses — spreadsheets alone only work if they connect to HMRC through bridging software.
  • Send quarterly updates to HMRC through MTD-compatible software, roughly every three months.
  • File a final declaration after the tax year ends, replacing the traditional self-assessment return.

The first quarterly updates were due by 7 August 2026, covering the quarter to 5 July (or 30 June if you elect to report calendar quarters). The remaining deadlines each year fall on 7 November, 7 February and 7 May.

Who joins, and when

  • April 2026: gross self-employment + property income over £50,000
  • April 2027: the threshold drops to £30,000
  • April 2028: a further drop to £20,000 has been announced

The test is your gross income (turnover, before expenses), not profit — and self-employment and rental income are added together. £35,000 of freelance income plus £20,000 of rent puts you over the £50,000 line.

Running a limited company? Mostly, relax

MTD for Income Tax applies to personal self-employment and property income. If you work through your own limited company, your salary and dividends don’t count towards the threshold — the company already handles its taxes separately, and MTD for corporation tax is not currently scheduled.

Where directors do get caught: rental properties held personally. If your gross rents (plus any sole-trader side income) pass the threshold, MTD applies to that income even though your company is unaffected.

What about penalties?

Late quarterly updates earn penalty points rather than instant fines, with a fine once you hit the points threshold — and HMRC allowed a soft landing on points for the first year’s updates for those who joined in April 2026. Late payment of tax is treated separately and more strictly, so deadlines for paying haven’t relaxed.

What you should do now

  • Over £50,000 gross? You should already be keeping digital records and making quarterly updates — if you’re behind, sort it now while penalties are at their gentlest.
  • Between £30,000 and £50,000? Your start date is April 2027. Move your records into software this year and the switch becomes a non-event.
  • Using FreeAgent? You’re in good shape — it’s MTD-compatible, and quarterly updates are filed from the records you’re already keeping.

Not sure whether MTD catches you, or want the quarterly updates handled? Get in touch — and if growing self-employed income is what’s pushed you over the threshold, it might also be the moment to ask whether a limited company now makes more sense.

Figures and dates correct as of July 2026. Thresholds and timings are set by HMRC and can change — we keep this guide updated.