Making Tax Digital

From 6 April 2026, approximately 795,000 sole traders and landlords earning over £50,000 annually will need to keep digital records, use MTD-compatible software and submit quarterly summaries of their income and expenses to HM Revenue & Customs. 

Those with qualifying income – gross income from self-employment and property before any tax allowances or expenses are deducted – above £30,000 will need to use MTD for ITSA from April 2027. The threshold will then decrease to £20,000 from April 2028.

MTD for ITSA will fundamentally change the tax reporting rhythm. Practices should embed quarterly reporting into their operational cycle, setting up reminders, checklists and review procedures for each submission period.

The standard quarterly reporting deadlines are:

• 6 April to 5 July
• 6 July to 5 October
• 6 October to 5 January
• 6 January to 5 April

Businesses can elect to report for calendar quarters:

• 1 April to 30 June
• 1 July to 30 September
• 1 October to 31 December
• 1 January to 31 March

The deadlines for quarterly updates will be 7 August, 7 November, 7 February and 7 May following the end of the relevant quarter.

Taxpayers will be required to maintain digital records of business and/or property income and expenses, including the following details:

• The amounts and dates of the transaction.
• The category of the expense (which is broadly aligned with those on the Self-Assessment return).

Taxpayers with turnover from either self-employment or property below the £90,000 VAT threshold can choose to submit simplified “three-line accounts” and just categorise each item as either income or expense and net profit.

Landlords will also be permitted to maintain less detailed records for jointly owned properties and will be allowed to avoid submitting quarterly updates for those properties and instead report them when finalising their year-end tax position.

However, separate quarterly updates will be required for each business a taxpayer is involved in so that an individual who is a sole trader and a landlord will need to provide eight quarterly updates each year.

Taxpayers must then complete a final declaration of their tax position through MTD-compatible software at the end of the year – based on the current Self-Assessment return of 31 January. This includes:

• All other sources of income (e.g., employment, dividends, bank interest) that have not already been reported.
• Claiming any relevant reliefs or allowances.

Digital records must not be kept in spreadsheets unless those spreadsheets are API-enabled or used in conjunction with bridging software that allows two-way communication with HMRC systems.