After several delays, Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is now set to begin from April 2026, marking a major shift in how landlords and self-employed individuals report income to HM Revenue & Customs.
If you earn income from self-employment, property, or a combination of both, the changes will affect how you keep records, submit information, and interact with the tax system. While the first group affected is still more than a year away from implementation, preparation is increasingly important.
What is Making Tax Digital for Income Tax?
MTD ITSA is a government initiative designed to modernise the tax system by moving away from annual, paper-based reporting. Instead of submitting a single self-assessment return at the end of the year, affected taxpayers will be required to keep digital records and submit quarterly updates to HMRC using compatible software.
At present, landlords and the self-employed typically record income and expenses manually and report them once a year. Under MTD, that process becomes more frequent and fully digital.
What will landlords and the self-employed need to do?
Once MTD ITSA applies, individuals will be required to keep digital records of their income and expenses using approved software. These records will feed into quarterly submissions to HMRC, providing regular updates on business and property income.
At the end of the tax year, a Final Declaration will still be required. This replaces the traditional self-assessment return and confirms all income sources, reliefs, and adjustments before the final tax bill is calculated. Tax will continue to be payable by 31 January following the end of the tax year, meaning payment deadlines themselves are not changing.
Digital records must be retained for five years after the 31 January following the relevant tax year, in line with existing self-assessment requirements.
When does MTD ITSA start?
The rollout is being phased in based on income levels, calculated on gross income from self-employment and property combined.
From April 2026, MTD ITSA will apply to individuals earning more than £50,000 a year. From April 2027, the threshold drops to £30,000. A further extension to those earning over £20,000 is expected from April 2028, although this remains subject to confirmation.
Common questions landlords are asking
Landlords with multiple UK rental properties will report all rental income together rather than submitting separate reports for each property. Overseas property income must be reported separately from UK property income but is still subject to MTD rules.
For jointly owned properties, only your share of the rental income counts towards the MTD threshold. Each owner is responsible for maintaining their own digital records and submitting their own quarterly updates.
How to prepare now
Although MTD ITSA does not start until 2026 for most taxpayers, early preparation can significantly reduce disruption. HMRC already allows voluntary sign-up, giving individuals time to adjust to quarterly reporting.
The most important step is choosing MTD-compatible software that can maintain digital records, submit quarterly updates, and complete the year-end Final Declaration. Some landlords and sole traders will manage this themselves, while others may prefer to appoint an accountant or tax agent to handle compliance on their behalf.
Making Tax Digital represents one of the biggest changes to the UK’s income tax system in decades. While the move to digital and quarterly reporting may feel daunting, those who prepare early are likely to find the transition far smoother.
For landlords and the self-employed who will fall within the new thresholds, now is the time to understand the requirements, review record-keeping practices, and ensure the right systems are in place well before April 2026.
