Are you a sole trader or landlord earning more than £20,000 per year? Big changes are on the horizon. HMRC has announced the phased rollout of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) — and it’s going to affect thousands more individuals over the next few years.
This move is part of HMRC’s ongoing effort to digitise the UK tax system, and it means that traditional paper records and Excel spreadsheets will soon no longer be enough.
Here’s what you need to know, and how to get your business or rental income tax-ready.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is HMRC’s initiative to modernise the UK tax system by replacing paper-based processes with digital ones. Under MTD for Income Tax Self Assessment, you’ll need to:
- Maintain digital records of all income and expenses
- Use MTD-compatible accounting software (like Xero, QuickBooks or FreeAgent)
- Submit quarterly digital updates to HMRC
- File a final End of Period Statement (EOPS) and Final Declaration at year-end
Who Will Be Affected by MTD for ITSA?
If you’re a sole trader or a landlord earning over £20,000 per year from self-employment or property, you will be required to comply with MTD for ITSA. Here’s the rollout timeline:
- April 2026 – Mandatory for those earning over £50,000
- April 2027 – Extended to those earning over £30,000
- April 2028 – Further extended to those earning over £20,000
If you fall into these thresholds, you’ll need to move to a digital system and start filing quarterly updates through approved MTD software.
What Does This Mean for Your Bookkeeping?
This means it’s time to say goodbye to manual record-keeping and hello to digital tax reporting. If you’re still using spreadsheets or boxes of receipts, now is the time to upgrade.
To stay compliant, you’ll need to:
- Choose and set up MTD-compliant cloud accounting software
- Start recording all income and expenses digitally
- Understand your new quarterly reporting responsibilities
It may sound like a big change, but with the right support, it’s entirely manageable — and it can even make your bookkeeping more efficient and insightful.
How We Can Help You Prepare for MTD
At Holden Associates, we’ve helped many clients move their bookkeeping into the cloud — and we can do the same for you. Whether you’re a sole trader or a landlord, we’ll:
- Help you choose the right MTD-compatible software
- Provide guidance on how to keep accurate digital records
- Ensure you’re fully compliant and confident ahead of your MTD start date
Get Ready Now and Stay Ahead
While April 2028 may sound a long way off, switching to digital bookkeeping sooner rather than later means less stress and more control over your finances. You’ll also be better prepared for real-time decision making and future tax changes.
Need help with Making Tax Digital for landlords or sole traders?
Get in touch with Holden Associates today — let’s get your systems sorted and take the stress out of tax.
