The rules for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) are changing—but now with an extended timeline. If you’re a landlord or a sole trader, it’s time to take note of when you’ll need to switch to digital record-keeping and quarterly reporting.
Although MTD for ITSA officially begins from April 2026, the government has now confirmed additional thresholds and new rollout dates, giving more people time to prepare.
Here’s what you need to know about the latest changes and how they might affect you.
What Is MTD for ITSA?
MTD for ITSA is HMRC’s move toward fully digital tax reporting. If you’re self-employed or earn income from property, you’ll eventually need to:
- Keep digital records using MTD-compatible software
- Submit quarterly updates to HMRC
- Make a final year-end declaration
These changes are being rolled out in stages depending on your income levels.
When Do the Rules Apply?
The rollout is now happening over three years. Your start date depends on your combined income from unincorporated trading and/or UK property before deducting any expenses.
Start Date 1: From 6 April 2026
Applies if your total income from trading and/or property is £50,000 or more.
Start Date 2: From 6 April 2027
Applies if your total income is £30,000 or more, but you weren’t already caught by the 2026 threshold.
Start Date 3: From 6 April 2028
Applies if your total income is £20,000 or more, but below £30,000.
As of now, there is no confirmed start date for those earning below £20,000 from self-employment or property. That means some of the smallest businesses and landlords remain out of scope—for now.
Important: It’s Combined Income That Matters
You may have separate trading and property income streams, but HMRC will assess your total combined income when applying these thresholds.
For example, if you earn £40,000 from self-employment and £12,000 from a rental property, you’ll still be within scope from April 2026—because your combined income is £52,000.
The key tax year for assessing whether you’re in scope from April 2026 is 2024/25. So, filing that tax return early can help you plan ahead.
Can You Opt Out Later?
Once you’re within MTD for ITSA, you stay in—unless your total trading and property income falls below the current threshold for three consecutive tax years.
This makes it especially important to plan ahead, as leaving the scheme won’t be easy once you’re in.
Case Studies: Who’s Affected and When?
Shane is a sole trader earning £45,000 in 2024/25, with additional rental income of £12,000. His total income is £57,000, so he must comply with MTD for ITSA from April 2026.
Diane earns £35,000 from self-employment. She won’t need to join in 2026, but she’ll be brought into the system from April 2027.
Rebecca runs two small sole trader businesses earning £15,000 and £7,000 respectively. Although each business earns less than £20,000, her combined income is £22,000—so she’ll need to comply from April 2028.
What Should You Do Now?
Whether you’re a sole trader, a landlord, or both, now is the time to:
- Check your 2024/25 income
- Determine your likely MTD start date
- Begin exploring MTD-compatible software
- Speak to your accountant about how to prepare
By starting early, you can make the transition smoother—and avoid the last-minute scramble.
Need Help Preparing for MTD for ITSA?
MTD for ITSA will bring big changes to the way many of our clients report their income. If you’re unsure when it applies to you, or how to get ready, we’re here to help.
Get in touch with Jon Davies Accountants today, and we’ll walk you through what you need, when you need it, and how to stay ahead of the curve.
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