From April 2026, one of the biggest changes to the UK tax system in decades comes into force. Known as Making Tax Digital (MTD) for Income Tax, it fundamentally changes how sole traders and landlords report their income to HMRC.

If you’re self-employed or running a small business, it’s not something you can ignore. Here’s what you need to know and what to do next.

Making Tax Digital (MTD) is HMRC’s initiative to modernise the tax system by moving away from annual tax returns to a digital, real-time reporting process.

Instead of submitting one Self Assessment return each year, you’ll need to keep digital records, submit quarterly updates to HMRC, and complete a final declaration at year end.

MTD for Income Tax is being introduced in phases:

• 6 April 2026: Sole traders and landlords earning over £50,000
• 6 April 2027: Threshold drops to £30,000
• 6 April 2028: Threshold drops to £20,000

Digital Record Keeping

You must keep records of your business income and expenses using MTD-compatible software.

Quarterly Reporting 


Instead of one annual submission, you’ll send four updates per year to HMRC.

Year-End Declaration

At the end of the tax year, you’ll complete a final declaration replacing the traditional Self Assessment return.

You’ll need to comply if you’re registered for Self Assessment and your income exceeds the relevant thresholds from self-employment or property.

1. Check Your Income Level
2. Choose the Right Software
3. Start Keeping Digital Records Early
4. Get Used to Quarterly Reporting

Speak to an Accountant.

Making Tax Digital represents a significant shift from annual reporting to a more real-time approach to tax. Businesses that prepare early will find the transition far easier.