Making Tax Digital for Income Tax (MTD ITSA) is now in force. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 are legally required to keep digital records and submit quarterly updates to HMRC, rather than filing one annual Self Assessment tax return. The first quarterly digital filing deadline lands on 7 August 2026.
If you are caught by the rules, you need to act. HMRC’s own figures show fewer than three in ten of the affected taxpayers had signed up by mid-April 2026, which means most of the 780,000 mandated filers are running into the first deadline without compliant software. Here is what the rules are, who is in scope, what the soft-landing year actually changes, and the practical steps to get sorted.
The short version
- From 6 April 2026, MTD for Income Tax is mandatory for sole traders and landlords with qualifying income above £50,000.
- Around 780,000 taxpayers are in scope. As of 10 April 2026, only 219,000 (28%) had signed up.
- The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. By 2028, MTD ITSA will catch a much larger population.
- First quarterly digital filing deadline: 7 August 2026, then 7 November, 7 February, 7 May (final).
- 2026/27 is a “soft-landing” year for late submissions. The standard penalty of £200 for each block of four missed quarterly submissions starts to apply from the 2027/28 tax year.
- Annual Self Assessment is being replaced for in-scope filers, not added to. The full 31 January deadline still applies for the final declaration of the tax year.
- You need MTD-compliant software. HMRC publishes a list of compatible products. Some are free for the smallest filers; most cost between £5 and £30 per month.
Who is in scope from 6 April 2026
MTD ITSA applies if all of the following are true:
- You are an individual taxpayer (a sole trader or landlord, not a limited company).
- Your total qualifying income from self-employment and / or property is above the threshold.
- The threshold for the 2026/27 tax year is £50,000.
The 2026/27 threshold test uses your 2024/25 tax return (the most recent finalised return). If your qualifying income for that year was above £50,000, you are mandated for MTD from 6 April 2026.
What counts as qualifying income
HMRC defines qualifying income for MTD ITSA as:
- Gross trading income from self-employment (sole trader). This is your gross turnover, not your profit after expenses.
- Gross property income (rent received before expenses). This includes both UK and overseas property income.
Important to note that the threshold is based on gross income, not profit. So a sole trader with £60,000 of turnover and £15,000 of profit (after expenses) is in scope, even though the taxable profit is below £50,000.
What does not count
Income that does not count toward the MTD threshold:
- Employment (PAYE) income.
- Pension income.
- Savings interest.
- Dividends (if you are not also self-employed).
- Capital gains.
- Partnership income (partnerships have their own MTD timeline, not 2026).
- Limited company income (companies do not have MTD ITSA at all; they have Corporation Tax obligations separately).