Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the single biggest change to UK personal tax compliance in a generation. After several deferrals, the rules now begin in earnest from 6 April 2026, and they will catch hundreds of thousands of sole traders and landlords who have never had to think about quarterly filing before. If your combined self-employment and property income is on the borderline, the time to act is now, not the week before your first submission window opens.
Who is in scope from April 2026
The first cohort comprises sole traders and individual landlords whose gross income from self-employment plus property (combined, not separately) exceeded £50,000 in the 2024/25 tax year, as reported on your 2024/25 Self Assessment return filed by 31 January 2026. Note that this is gross, not net. A landlord receiving £55,000 in rent who only nets £8,000 after mortgage interest is still in scope.
The second cohort, with combined gross income above £30,000, joins from April 2027. A third tier covering the £20,000 to £30,000 band has been signalled for 2028. Partnerships are not yet included but a date will follow.
What "compliance" actually means in practice
MTD ITSA replaces the single annual Self Assessment return with four quarterly updates, a year-end "final declaration", and digital recordkeeping throughout. Specifically:
- Quarterly updates are due by the 7th of the month following the quarter end (for the standard 6 April to 5 April year, that is 7 August, 7 November, 7 February and 7 May).
- You can elect for "calendar quarters" ending 30 June, 30 September, 31 December and 31 March, which most landlords and traders find easier.
- Records must be kept in functional compatible software and submitted via API. Spreadsheets are permitted only if combined with bridging software.
- The annual final declaration replaces the SA100 and must be filed by 31 January after the tax year, alongside any other personal income (employment, dividends, savings interest).
The transition trap most people miss
Quarterly updates do not require accruals or finalised journals — they are essentially running totals of income and expense categories. But because the totals are cumulative across the year, an error in quarter one carries through to all later submissions. We are already seeing clients who tried free or low-cost apps in 2025 hit reconciliation issues when restated figures arrive from suppliers or letting agents. Getting your bookkeeping on a robust footing before April 2026 is the single highest-leverage thing you can do now.
Penalties under the new points-based regime
Late quarterly updates accumulate penalty points. Once a threshold is reached (four points for quarterly filers), a £200 fixed penalty applies, with further £200 penalties for each subsequent late submission until the slate is wiped. Late payment is handled separately, with interest from day one and surcharges that escalate at days 15 and 30. The headline message: missing a quarterly update is no longer a clerical oversight, it has a price tag.
What to do between now and April 2026
- Confirm whether you are in scope. Pull your 2024/25 figures and check gross income against £50,000.
- Select MTD-compatible software. Xero, QuickBooks, FreeAgent and Sage have certified solutions. Avoid anything not on the HMRC list — switching mid-year is painful.
- Reconcile your opening position. Get 2025/26 books closed cleanly so you start MTD with accurate balances.
- Choose your quarter pattern. Calendar quarters align better with VAT and PAYE for most clients.
- Set up an agent authorisation. Your accountant needs an MTD-specific 64-8; the old paper one does not transfer automatically.
If you would like a 30-minute readiness review before the April start, book a call with our team or read more of our insights on UK compliance. We have already onboarded over 150 sole traders and landlords onto MTD-ready systems and the experience consistently shows that the firms who start six months early file painlessly, while those who leave it to the last quarter end up paying surcharges in their first year.
For broader context on how MTD interacts with your wider tax position, our tax planning service sits alongside the MTD onboarding work and ensures the quarterly numbers also align with year-end strategy. Get in touch via our contact page if you would like to discuss your specific position.