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With less than a year remaining, sole traders and landlords earning over £50,000 must prepare to switch to the Making Tax Digital (MTD) for Income Tax system by April 6, 2026. This major move toward digital record-keeping and real-time income reporting to HM Revenue and Customs (HMRC) is designed to save taxpayers time and improve efficiency.
By keeping digital records throughout the year, users can avoid the annual scramble of gathering paperwork for tax returns, allowing them to focus more on growing their businesses. This change is part of the Government's wider economic strategy.
According to HMRC, around 780,000 self-employed individuals and landlords will be required to adopt MTD for Income Tax from April 2026. Another 970,000 will be brought into the system starting in April 2027.
The new requirement includes submitting quarterly updates, which spreads the workload over the year and brings tax reporting closer to real-time. This helps businesses stay organized and reduces the chance of last-minute stress.
HMRC is urging eligible individuals to join the current testing programme available on GOV.UK, and agents can also register clients through the site.
Exchequer Secretary to the Treasury, James Murray MP, called MTD for Income Tax a vital part of the government’s plan to modernize the tax system and drive economic growth. "By modernising how people manage tax, we’re helping them work more efficiently and ensuring fairness," he stated.
He highlighted this initiative as a cornerstone of the government’s “Plan for Change” and a critical move toward removing obstacles to economic progress.
Craig Ogilvie, HMRC’s director of Making Tax Digital, praised the program, calling it the most significant change to the Self Assessment system since 1997. He encouraged early participation, noting that those who join the testing phase will receive dedicated support and a head start before the system becomes mandatory.
From April 2026, individuals earning over £50,000 in combined self-employment and property income will be required to maintain digital records, use MTD-compatible software, and submit quarterly income and expense summaries to HMRC.
The digital approach aims to simplify business operations, reduce errors, and provide a clearer view of tax obligations throughout the year.
Qualifying income includes gross earnings from self-employment and property before deducting expenses or allowances. From April 2027, those earning over £30,000 will join the system, and the threshold will drop further to £20,000 in April 2028.
This rollout follows the success of MTD for VAT, which has already helped over two million businesses improve accuracy and save time. Businesses involved in early testing for MTD for VAT found it easier to transition to quarterly reporting.
A 2021 independent report revealed that 69% of businesses required to use MTD for VAT saw at least one benefit, while 67% reported fewer record-keeping errors.
