864,000 sole traders and landlords face new MTD reporting rules from April 2026

HMRC has reminded over 864,000 sole traders and landlords that they have just two months to prepare for Making Tax Digital (MTD) for Income Tax.

The new filing rules start on 6 April 2026 for those earning over £50,000 from self-employment and property income.

From April, any taxpayers who fall within the scope of the initial rollout will need to use recognised accounting software to maintain digital records and submit quarterly updates to HMRC on income and expenses.

The quarterly updates are not additional tax returns. The government’s aim for MTD is to spread the administration workload across the year rather than leaving everything until the current January 31st deadline.

Who is affected from 6 April 2026

MTD for Income Tax becomes mandatory from 6 April 2026 if your qualifying income (i.e. your combined self-employment and property income) was £50,000 or more in the 2024 to 2025 tax year.

According to HMRC, the MTD system has already been successfully tested, with thousands of volunteers signed up and more than 12,000 quarterly updates submitted.

Read HMRC’s online guidance here.

What you will need to do under MTD for Income Tax

• Use MTD-compatible software to keep digital records of income and expenses.
• Send four quarterly updates each year using the software.
• You still need to submit an end-of-year tax return by 31 January, but your quarterly data will already be stored within within your digital software platform.

Deadlines and what happens next

HMRC has published the key dates for those joining MTD for Income Tax from April 2026.

The rollout is being phased in based on income level:

These income thresholds apply to combined self-employment and property income. Those earning less than £20,000 are not currently required to join MTD for Income Tax, although HMRC has said this position will be reviewed.

What happens if I don’t file on time?

HMRC also confirmed that taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates for the first 12 months.

After that, late submissions may trigger automatic penalties, and a £200 penalty applies once four points are reached.

What should you do now?

If you think you fall within the scope of the initial MTD for Income Tax roll out in April, make sure you:

• Check the rules and your income level to determine whether you are included.
• Choose accounting software that supports MTD for Income Tax and suits your business (i.e. don’t get complex software if you have minimal records to keep).
• Sign up well in advance of April, or talk to your accountant if you hav one.

For ByteStart readers, we have some useful guides that explain the changes in detail and what to do next:

• Making Tax Digital for the self-employed – what changes, and who is affected
• MTD ITSA deadlines – key dates and rollout timetable
• Many self-employed people are still unprepared for the April 2026 deadline
• Accounting software for MTD Income Tax – what to look for