Making Tax Digital for
Income Tax
What Sole Traders and Landlords Need to Know Before April 2026
The way self-employed individuals and landlords report their income to HMRC is changing and the clock is ticking. Making Tax Digital (MTD) for Income Tax is coming into effect from 6 April 2026, and if you earn over £50,000 from self-employment or property, this change affects you directly. At ency&line, we want to make sure you're fully prepared not scrambling at the last minute.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC's initiative to modernise the UK tax system. Instead of filing one annual Self Assessment tax return, you'll need to maintain digital records of your income and expenses throughout the year and send quarterly updates to HMRC using compatible software. This isn't just a tweak to the existing process it's a fundamental shift in how tax reporting works in the UK.
Who Does It Apply To?
From 6 April 2026, MTD for Income Tax is mandatory if you:
- Are an individual registered for Self Assessment
- Receive income from self-employment, property, or both
- Have qualifying income exceeding £50,000 per year
If you're a sole trader juggling business income alongside rental income, both streams count toward that threshold. It's important to check your combined qualifying income now not when the deadline arrives.
What Will You Need to Do?
01.
Keep digital records
All your income and expenses must be recorded digitally using HMRC-compatible software. Spreadsheets alone won't cut it you need software specifically designed to work with MTD.
02.
Submit quarterly updates
Four times a year, you'll send a summary of your income and expenses to HMRC through your software. These are not tax returns they're progress updates but they must be submitted on time.
03.
File your annual tax return
You'll still complete a final tax return and pay any tax owed by 31 January the following year, just as you do now, but this will also be done through MTD-compatible software. Stay compliant
Why Early Preparation Matters
One of the biggest mistakes we see is leaving compliance changes to the last minute. Switching to new software, learning how it works, and getting your records in order all takes time. Businesses that adopt compatible software early will:
- Avoid the stress of rushed compliance
- Have time to properly train on the platform
- Catch any bookkeeping gaps before they become problems
- Benefit from cleaner, more organised financial records year-round
At ency&line, we work with clients to identify the right software, set up digital record-keeping systems, and ensure quarterly submissions are accurate and on time.
What If You Use an Agent or Accountant?
Good news if you work with an accountant or tax advisor, they can manage MTD submissions on your behalf. HMRC allows for both main agents and supporting agents, giving flexibility in how your tax affairs are handled. If you're already working with ency&line, we can be set up as your authorised agent to handle your MTD obligations seamlessly.
Are There Any Exemptions?
Not everyone will be required to join MTD for Income Tax. HMRC does provide exemptions in certain circumstances for example, if it would be unreasonable for you to use digital tools due to age, disability, location, or religious belief. If you think you may qualify for an exemption, it's worth exploring this early and seeking professional advice.
Stay Ahead with ency&line
MTD for Income Tax is not optional for those above the threshold, and it's arriving sooner than many people realise. The good news is that with the right support and the right software in place, it doesn't have to be complicated. Whether you're a sole trader, a landlord, or managing both ency&line is here to guide you through every step. From setting up your digital records to submitting your quarterly updates and annual return, we make sure you stay compliant, stress-free, and ahead of the curve.
