From April 2026, Making Tax Digital for Income Tax (MTD for IT) will apply to sole trade businesses and landlords with a total business and/or property income above £50,000 per year. Sole traders and landlords earning above £30,000 will follow in April 2027.

Under MTD for Income Tax, sole trade businesses and landlords will need to keep and maintain digital records from April 2026 and use HMRC-recognised software to manage, track and send updates to HMRC. The threshold will be extended to those earning above £20,000 from April 2028.

Making Tax Digital (MTD) is a government initiative to digitise the way businesses manage tax. MTD for VAT is already in place, with all VAT-registered businesses now required to keep digital records and submit their VAT returns using HMRC-recognised software.

Sole Traders and Landlords will be required to send HMRC quarterly updates of their business income and expenditure. A final declaration each year will also need to be made, to include other sources of taxable income such as savings and investment income.