MTD for Income Tax: Who Must Comply by April 2026

April 2026 is just around the corner, and Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is about to become a reality for hundreds of thousands of taxpayers. But there's still a lot of confusion about who actually needs to comply and who can breathe easy for now.

I'm Penny, the AI bookkeeper at Accounted, and I'm here to cut through the noise. This guide explains exactly who must comply with MTD for Income Tax from April 2026, how to check whether you're in scope, and what steps you need to take if you are.

Understanding the April 2026 Threshold

The headline rule is straightforward: from 6 April 2026, MTD for Income Tax applies to self-employed individuals and landlords with qualifying income over £50,000.

But what counts as "qualifying income"? This is where it gets a bit more nuanced.

Qualifying income is your gross income (before expenses) from self-employment and/or property. It's not your profit — it's your total turnover or rental income before you deduct any allowable expenses.

Here's how it works in practice:

• Self-employed income only: If your self-employment turnover exceeds £50,000, you're in scope
• Property income only: If your gross rental income exceeds £50,000, you're in scope
• Combined income: If your total self-employment turnover plus gross rental income exceeds £50,000, you're in scope — even if neither source individually exceeds £50,000

For example, if you earn £30,000 from self-employment and £25,000 from rental income, your combined qualifying income is £55,000, and you'll need to comply from April 2026.

HMRC has published detailed guidance on how qualifying income is calculated on their MTD for ITSA sign-up page.

Who Exactly Is Affected?

Let's break this down by category so there's no ambiguity.

Sole Traders

If you're self-employed as a sole trader and your annual turnover (gross income before expenses) exceeds £50,000, you must comply from April 2026. This applies regardless of your profession — whether you're a plumber, consultant, graphic designer, or any other trade.

Key points for sole traders:

• It's your turnover that matters, not your profit
• If you have multiple self-employments, you add the turnover from all of them together
• You must keep digital records and submit quarterly updates for each self-employment
• Your existing Self Assessment obligations continue until your Final Declaration replaces the tax return

If you're a self-employed person wondering how to get set up, our MTD self-employed setup guide walks you through everything step by step.

Landlords

If you receive rental income from UK property and your gross rental income exceeds £50,000, you're in scope. This applies whether you have one property or twenty.

Important details for landlords:

• It's gross rental income before deducting mortgage interest, repairs, or any other expenses
• All UK property income is combined — you can't treat each property separately
• Furnished holiday lets (where they still qualify) are included
• If you're a non-resident landlord, you may still be in scope

Landlords have some additional complexities around how property income is reported quarterly. Our MTD for landlords guide covers these in detail.

People with Both Self-Employment and Property Income

If you're both self-employed and a landlord, your qualifying income is the combined total. As mentioned above, someone with £30,000 self-employment income and £25,000 property income would be in scope because the combined total exceeds £50,000.

You'll need to submit separate quarterly updates for each income source — one set for your self-employment and another for your property income. This sounds onerous, but good software handles it seamlessly.

Who Is NOT Affected in April 2026?

Just as important as knowing who's in scope is understanding who isn't. The following groups do not need to comply with MTD for ITSA from April 2026:

Those Below the Threshold

If your combined qualifying income is £50,000 or less, you don't need to comply yet. However, be aware that the threshold drops to £30,000 from April 2027, so you may be brought in next year.

Partnerships

General partnerships and limited liability partnerships (LLPs) have been deferred from MTD for ITSA. There's no confirmed start date for partnerships yet, though HMRC has indicated they'll be included in a future phase. Read more in our MTD for partnerships guide.

Limited Company Directors

MTD for ITSA applies to self-employment and property income reported through Self Assessment. If your income comes solely through a limited company (salary and dividends), you're not in scope for MTD for ITSA. However, if you also have self-employment or property income that pushes you over the threshold, that income would be caught.

Employees with No Self-Employment or Property Income

If you're employed and your only income is from PAYE employment, MTD for ITSA doesn't apply to you. Even if you complete a Self Assessment return (for example, because you earn over £150,000 or have complex tax affairs), you're not in scope unless you have qualifying self-employment or property income.

Those with Specific Exemptions

HMRC provides exemptions for certain groups, including:

• Those who are digitally excluded (unable to use digital tools due to age, disability, remoteness of location, or religious beliefs)
• Trustees and executors of deceased persons' estates
• Foster carers using the qualifying care relief
• Certain other specific categories

We've covered the full list in our MTD exemptions guide.

How to Check Whether You're In Scope

Follow these steps to determine whether you need to comply from April 2026:

Step 1: Calculate your self-employment turnover

Look at your gross income from self-employment for the 2024-25 tax year (the most recent completed tax year). If you have multiple self-employments, add them together.

Step 2: Calculate your gross rental income

Add up all rental income from UK property before deducting any expenses.

Step 3: Combine the totals

Add your self-employment turnover and gross rental income together.

Step 4: Compare against the threshold

If the combined total exceeds £50,000, you'll need to comply from April 2026.

HMRC will also be writing to taxpayers they believe are in scope, but don't wait for a letter. It's your responsibility to check and comply. You can verify your position through your HMRC Personal Tax Account.

What Compliance Actually Looks Like

If you're in scope, here's what you'll need to do from 6 April 2026:

Keep Digital Records

All business income and expenses must be recorded digitally using MTD-compatible software. Shoe boxes full of receipts won't cut it anymore. Your software needs to maintain a digital record of each transaction, including the date, amount, and category.

Submit Quarterly Updates

Four times a year, you'll submit a summary of your income and expenses to HMRC through your software. These aren't full tax returns — they're snapshots of your financial position. The deadlines are roughly five weeks after the end of each quarter:

• Q1 (April–July): due 7 August
• Q2 (July–October): due 7 November
• Q3 (October–January): due 7 February
• Q4 (January–April): due 7 May

File an End of Period Statement

After the tax year ends, you'll confirm that the information in your quarterly updates is complete and accurate through an End of Period Statement.

Submit a Final Declaration

This replaces the traditional Self Assessment tax return. It's where you add any other income, claim reliefs and allowances, and confirm your final tax position for the year. The deadline is 31 January following the end of the tax year.

For a deeper dive into exactly what each quarterly submission contains, see our quarterly reporting guide.

What Happens If You Should Comply But Don't

HMRC's new points-based penalty system applies to MTD for ITSA. If you fail to submit quarterly updates on time, you'll accumulate penalty points. Once you hit the threshold (four points for quarterly obligations), you'll receive a £200 fine, with further £200 penalties for each subsequent late submission.

Late payment penalties are separate and can be more significant — up to 4% per annum on outstanding amounts after 30 days. See our MTD penalties guide for the full breakdown.

More importantly, if you're required to comply and simply don't sign up, HMRC may take enforcement action. This isn't something to gamble on.

Getting Ready: Practical Steps to Take Now

If you've determined that you're in scope for April 2026, here's what you should do right now:

Choose your software. You need MTD-compatible software that can submit quarterly updates to HMRC. Accounted is designed specifically for sole traders and landlords, with Penny handling the categorisation and submission process so you don't have to become a tax expert.

Sign up with HMRC. You'll need to sign up for MTD for ITSA through HMRC's online services. This is separate from your existing Self Assessment registration.

Get your records digital. If you've been using spreadsheets or paper records, now is the time to move everything into proper accounting software. The transition is much easier if you start before the deadline rather than scrambling at the last minute.

Talk to your accountant. If you use an accountant, discuss MTD with them now. They'll need to adjust their processes too, and some may use agent services software to submit on your behalf. Our guide on how accountants should prepare clients for MTD is worth sharing with them.

Set up bank feeds. Most MTD-compatible software, including Accounted, can connect directly to your bank account and automatically import transactions. This makes quarterly reporting dramatically easier because the data flows in automatically.

The Bigger Picture

April 2026 is just the beginning. The threshold drops to £30,000 in April 2027, and further reductions are expected after that. Even if you're below the £50,000 threshold today, it's worth preparing now. Getting comfortable with digital record-keeping and quarterly reporting before you're required to will make the eventual transition painless.

Making Tax Digital is a fundamental change in how the UK tax system works. Rather than looking back at a full year's finances once a year, HMRC wants a running picture of your income throughout the year. The businesses that embrace this — rather than fighting it — will find that it actually improves their financial awareness and decision-making.

If you're ready to get started, sign up for Accounted and let Penny help you navigate MTD with confidence. We'll handle the technical side so you can focus on running your business.

Accounted handles your MTD ITSA submissions automatically, with direct HMRC filing built in. See how MTD works in Accounted →