We’ve recently updated our website content for Making Tax Digital for Income Tax Self Assessment to reflect the latest guidance from HMRC.
With the first mandation date being April 2026, Sole Traders and Landlords are strongly advised to start planning ahead for how MTD ITSA will impact them. Although the income threshold is initially £50,000 it reduces to £20,000 by April 2028 so all but the very smallest sole traders and landlords will be impacted.
Key points:
- MTD ITSA applies to individuals with income from Self Employment or Property Rental
- First mandation is April 2026 for individuals with gross turnover and rents of over £50,000 in 2024-25. (note the retrospective test)
- Threshold reduces to £30,000 in April 2027, and £20,000 in April 2028.
- Requirement to keep records digitally and submit quarterly returns of income and expense, with the annual Self Assessment obligation remaining substantively unchanged.
We’ve added a new section to the guidance around Planning Ahead:
It is important that sole traders and landlords plan ahead. Our advice is:
- Make sure you know your turnover and rental income figures – remember they are aggregated for MTD mandation purposes. April 2026 mandation requirements are based on 2024-25 turnover, and these figures may not be finalised until January 2026, so a check from your own records is suggested.
- If you are not already using MTD compliant software, it is strongly advised that you take this on now and familiarise yourself with it, especially if you are likely to be mandated from April 2026 (£50,000) or April 2027 (£30,000).
- If you think you may need help from us in maintaining digital records or submitting quarterly returns, please get in touch sooner rather than later so this can be planned. We have limited capacity and if there is a significant short notice demand placed on us for MTD ITSA support we may not be able to accommodate this.
Mitigation options to avoid MTD ITSA obligations are forming a partnership or incorporating your business. These however are wider commercial matters which need to be considered carefully.