Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will change how many UK sole traders and landlords report income to HMRC from April 2026. Qualifying taxpayers must move from annual Self-Assessment to quarterly digital updates. Businesses that rely on spreadsheets or year-end bookkeeping may need to reorganise their records and systems before the first submission deadline. Late or incorrect submissions can trigger HMRC penalties. Legend Fusions supports clients in determining whether MTD for ITSA applies to them, setting up fully compliant digital systems, and managing a smooth transition to quarterly reporting.
HMRC expects more than 800,000 taxpayers to fall within scope from April 2026.
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MTD for Income Tax Self Assessment begins in April 2026 for individuals with qualifying income above £50,000. The threshold expands to £30,000–£49,999 in April 2027 and £20,000–£29,999 in April 2028. Once within scope, taxpayers must move from annual Self Assessment to quarterly digital reporting.
You must comply with MTD for ITSA if you are a UK sole trader or landlord whose total qualifying income exceeds the threshold. This includes combined self-employment and property income.
The initial threshold is £50,000 of total qualifying income from April 2026. It reduces to £30,000 in April 2027 and £20,000 in April 2028, based on gross self-employment and property income.
Yes. Landlords must comply if total qualifying income exceeds the MTD threshold. This includes rental income alone or rental income combined with self-employment income.
HMRC applies a points-based penalty system for late submissions under MTD for ITSA. Each missed deadline adds a penalty point, and financial penalties apply once the threshold is reached.
MTD requires HMRC-compatible software to maintain digital records and submit quarterly updates. Businesses using spreadsheets must connect them to HMRC through approved bridging software.
Taxpayers whose income remains below the MTD threshold continue to file through the current Self Assessment system. Once income exceeds the threshold, quarterly digital reporting under MTD replaces the annual-only filing structure.
