Making Tax Digital for Income Tax is here: who is in now, and who joins in 2027 and 2028

For most sole traders and landlords, the self assessment rhythm has been the same for decades: one return, one deadline in January, one annual panic. Making Tax Digital for Income Tax — MTD ITSA — ends that. Since 6 April 2026, people with more than £50,000 of qualifying income must keep digital records and send HMRC updates every quarter instead.

Who is pulled in first

The £50,000 trigger is qualifying income — gross self-employment income plus gross property income, before expenses. It is not profit and it is not your total income: a salary or pension does not count towards the threshold. But if you are a sole trader turning over £55,000 while keeping expenses of £30,000, you are in — the test applies to the £55,000, not the £25,000 you actually earned.

General partnerships are being brought in later, and the threshold drops to £30,000 from April 2027 and to £20,000 from April 2028 (announced at Spring Statement 2025, legislated March 2026) — much larger groups. The direction of travel is clear even where the dates have moved before: at the time of writing those are the published figures, and they are worth confirming on gov.uk.

What changes day to day

• Digital record keeping: income and expenses recorded in MTD-compatible software, not a shoebox or a December spreadsheet.
• Quarterly updates: a summary sent to HMRC every three months, within about a month of each quarter end.
• A final declaration by 31 January after the tax year — the digital equivalent of today’s return, confirming everything including non-business income.

What to do now

1. Work out your qualifying income — self-employment plus property, gross not net.
2. Choose software early: the list of HMRC-recognised products is on gov.uk, and many accounting packages already support it.
3. Move your record keeping onto it this tax year so the habits exist before the obligation does.
4. If you use an accountant, ask whether they will file quarterly updates for you — most will, for a fee.

The eligibility checker and the recognised-software list are on the MTD Income Tax pages on gov.uk. The thresholds and dates quoted here are correct at the time of writing.

What MTD changes in practice

The deeper shift is from memory to rhythm. An annual return lets a year of records be reconstructed badly in January; quarterly updates force a cadence — income and expenses logged as they happen, software doing the arithmetic, no reconstruction. For businesses that already keep digital books, the marginal cost is modest. For the shoebox-and-spreadsheet minority, this is the largest workflow change in self assessment history.

Expect a transition period of grace on penalties — HMRC has historically softened late-filing penalties in the first year of new regimes — but do not build a plan on leniency.

If you sit just under the line, do not get comfortable — the £30,000 wave follows a year later, and the habits are identical either way. Starting the digital records now is free preparation: when the obligation lands, it lands on a business already running the rhythm rather than one learning it against a deadline.

If the April 2026 start date feels distant, it is not — the first quarterly update will be due within months of the tax year opening, and software migration always takes longer than expected. The businesses that find this easy are the ones who moved their books onto compatible software a season early; the scramble belongs to everyone else.