Making Tax Digital for Income Tax: 2026 Changes Incoming

If you’re self-employed or earn rental income during the tax year, Making Tax Digital for Income Tax (MTD for ITSA) will change the way you report your taxes from 2026 onwards. This government initiative is designed to make tax reporting easier, more efficient and less prone to errors.

What’s Changing?

From 6th April 2026, sole traders and landlords with qualifying income over £50,000 will be required to:
- Keep digital records of income and expenses
- Submit quarterly updates using HMRC-approved software.
It’s important to note that quarterly updates are for reporting purposes only and the tax payment deadlines remain unchanged.

Does This Apply to You?

HMRC will assess the gross income declared on your previous Self-Assessment Tax Return to determine if you exceed the threshold.

Here are the key thresholds:  
Over £50,000 for the 2024-25 tax year ➡️ Start from 6th April 2026
Over £30,000 for the 2025-26 tax year ➡️ Start from 6th April 2027
Over £20,000 for the 2026-27 tax year: the government plans to introduce legislation to lower the threshold further.

Penalty Relief for Early Adopters:

As a part of the soft landing for MTD ITSA, taxpayers joining in April 2026 will not receive penalty points for late submission of their first four quarterly updates. These updates must be submitted before the tax return deadline. However, the penalty easement does not apply to the end of year tax return for 2026/27 that will be due to be filed by 31st January 2028.

Next Steps

HMRC will notify you via letter when you are required to comply. Alternatively, please contact us and we’ll check your status to help you get ahead of the rush.

As one of the leading accountants in Coventry, we’re partnered with Xero, an approved software solution ready to facilitate MTD for ITSA. Whether you’re a landlord with properties or a sole trader running a business, don’t delay and contact us as your local Coventry Accountant.