The rollout of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) has seen several delays, but it’s now officially set to kick in from April 2026.
If you’re self-employed or a landlord, it’s time to start preparing for some major changes in how you report your income to HMRC.
In this article, we’ll break down what MTD is, who it affects, when it takes effect, and what you need to do to stay compliant.
What is MTD for Income Tax?
It is a government initiative that requires self-employed individuals and landlords to keep digital records and submit quarterly updates to HMRC with the help of compatible software.
Currently landlords and the self-employed are only required to declare their income and expenses at the end of the year via a self-assessment tax return and are not required to keep a digital record of their property income and expenses.
What will be required?
Under MTD for ITSA, affected individuals will need to:
- Keep digital records of income and expenses using compatible software
- Submit quarterly updates to HMRC outlining income and expenditure
- Finalise the year by submitting a ‘Final Declaration’ with any year-end adjustments and all other income sources
- Pay tax owed by 31 January following the end of the tax year
When is it being introduced?
MTD will be rolled out in phases based on income levels:
- April 2026: Individuals with income over £50,000
- April 2027: Individuals with income over £30,000
- April 2028: Expected rollout for those with income over £20,000 (subject to confirmation)
Note: The income threshold includes gross income from self-employment and property combined.
The digital records must be retained for five years after the 31 January following the tax year they relate to – the same as current self-assessment rules.
Some questions we are being frequently asked….
What if I own multiple rental properties?
You’ll report all your UK rental income together. There’s no need to submit separate quarterly reports for each property.
How is overseas property income handled?
Overseas property income must be reported separately from UK property income, but it’s still subject to MTD rules.
What happens if I own a property jointly?
Only your share of the income counts towards the MTD threshold.
Each co-owner must report their share of the income through their own digital records and quarterly updates.
What next?
Even though MTD doesn’t kick in for most until 2026, it’s wise to prepare early. You can opt to register for MTD now.
The first, most important step is to find MRD-compatible software. This software should help you:
- Keep digital business records
- Submit quarterly updates to HMRC
- Finalise your year-end income and tax declaration
You can either maintain digital records yourself or appoint an accountant or agent to handle it for you.
Final thoughts
MTD for landlords and the self-employed represents a significant change and while the move to digital may feel daunting at first, preparing now will make the transition much easier.
If you think you are going to be affected, now is the time to prepare, by selecting compatible software and getting to understand what your record-keeping and reporting requirements will be.
By preparing now, you will be able to navigate the transition smoothly and ensure compliance which in turn will help avoid potential penalties.
Get in touch at enquiries@cowgills.co.uk if you need advice.
