Making Tax Digital in 2026: Where Things Stand and What’s Next

In April 2026, Making Tax Digital for Income Tax Self-Assessment (ITSA) was introduced, making this the first summer where MTD genuinely affects a meaningful number of sole traders and landlords (not just VAT-registered businesses).

This blog explains who’s affected, what it means, and what’s on the horizon.

Recap: What actually is making tax digital?

Making Tax Digital (MTD) is a UK government initiative to modernise the tax system, shifting taxpayers towards digital record-keeping and electronic tax administration.

The approach is designed to make submitting tax returns easier, reduce errors, and close the “tax gap”. This is the difference between tax owed and tax paid, usually caused by errors, avoidance or evasion.

MTD, of course, brings new risks and challenges to be aware of, regarding:

Compliance: failure to maintain digital records, submit quarterly updates, or use approved software.
Operational Burdens: small businesses/landlords may face new software subscription costs and accountant dependency.
Cash Flow: frequent reporting gives HMRC more immediate insight into taxable profits, potentially speeding up how quickly they identify potential issues.
Transition: many taxpayers remain unprepared or unaware of changes, creating widespread onboarding and adoption issues. But a qualified accountant can make sure you’re all set up correctly.

Who is affected right now (Summer 2026)

MTD for Income tax currently applies to the income of sole traders and landlords subject to levels of turnover.

The introduction of MTD for ITSA will happen gradually:

April 2026: self-employed individuals and landlords with an income above £50,000 – based on gross turnover (before expenses) per your 2024/25 finalised tax return.
April 2027: self-employed individuals and landlords with an income above £30,000 - based on gross turnover (before expenses) per your 2025/26 finalised tax return.
April 2028: self-employed individuals and landlords with an income above £20,000

What does this mean?

MTD for ITSA means that good accounting software is no longer optional. Self-assessment taxpayers must maintain digital records of income and expenses, including those from property.

This will be a significant change for many self-assessment taxpayers used to the traditional ways of accounting and submitting their tax returns, but it need not be a problem if the right preparation is made and the right advice is sought.

Even if the changes aren’t mandatory for you yet, make sure to prepare yourself before it’s your turn. This means getting familiar with digital accounting software and maintaining accurate electronic records. Regular, consistent bookkeeping now will save you time down the line!

Should you adopt MTD for Income Tax early?

Even if you aren’t scheduled to be affected by Making Tax Digital for Income Tax until 2028, there are lots of benefits to getting on board early.

Getting ahead of the game means you’re already familiar with the software and have better bookkeeping in place before it becomes compulsory. It means no awkward or rushed transition, which is where costly errors can happen.

Digital accounting is also great for planning and financial decision-making, with up-to-date reporting supporting your journey. It can also save you a lot of time on finance!