From 6 April 2026, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will become mandatory for many landlords and self-employed individuals. This represents one of the most significant changes to personal tax reporting in recent years, replacing the traditional annual Self-Assessment tax return with a fully digital reporting system.
At Parker Russell UK, we are helping clients prepare early so the transition is smooth, compliant and stress-free.
Who Will Be Affected?
From April 2026, MTD for Income Tax will apply to landlords and self-employed individuals whose total qualifying income exceeds £50,000 per year. Qualifying income includes:
- Self-employment income
- Property rental income
- A combination of both sources
Further phases are planned:
- April 2027 – threshold reduces to £30,000
- April 2028 – threshold expected to reduce to £20,000 (subject to legislation)
Many individuals who are not affected in 2026 will still need to prepare for compliance in the following years.
What Is Changing?
MTD for Income Tax introduces three major requirements.
1.Digital Record Keeping
Paper records and manual bookkeeping methods will no longer be sufficient. You will need to maintain digital records using HMRC-approved software.
This means:
- Recording income and expenses digitally
- Storing supporting information electronically
- Using compliant software that can submit information directly to HMRC
Spreadsheets alone will generally not meet the requirements unless linked to compatible software.
2. Quarterly Updates
Instead of submitting one annual Self-Assessment return, you will be required to send quarterly updates to HMRC.
These updates will summarise:
- Income received
- Allowable expenses
- Estimated profit or loss
Quarterly reporting will provide HMRC with a more up-to-date picture of your tax position and will require more regular bookkeeping throughout the year.
3. Final Declaration
At the end of the tax year, you will still need to confirm your final tax position.
This involves:
- Submitting an End of Period Statement (EOPS) for each income source
- Completing a Final Declaration to confirm your total taxable income
These submissions will replace the traditional annual Self-Assessment tax return.
What You Should Do Now?
Review Your Income
The first step is to determine whether you will be affected.
Your 2024/25 tax year income will be used to assess whether you exceed the £50,000 threshold for April 2026.
Landlords and sole traders close to the threshold should prepare early, as future income increases could bring you into scope.
Choose Suitable Software
MTD requires the use of HMRC-compatible software to maintain digital records and submit updates.
Selecting the right system is essential. The best option will depend on:
- The size of your business
- Number of properties
- Complexity of your records
- Existing bookkeeping systems
Plan Your Transition
Moving from annual reporting to quarterly submissions requires changes to your processes.
Early preparation allows time to:
- Set up digital records
- Learn new systems
- Avoid last-minute compliance issues
- Ensure accurate submissions
How Parker Russell UK Can Help
MTD for Income Tax will affect how you manage your finances throughout the year. Many clients are understandably concerned about the additional administrative burden and software requirements.
Parker Russell UK provides practical support including:
- Assessing whether you fall within MTD requirements
- Advising on suitable HMRC-approved software
- Setting up digital bookkeeping systems
- Managing quarterly submissions
- Preparing End of Period Statements and Final Declarations
- Ongoing compliance and support
Our team is on hand to guide you through the process and ensure you remain fully compliant with HMRC requirements.
Start Preparing Now
Although April 2026 may seem some distance away, early preparation is essential to avoid disruption and unnecessary stress. If you are a landlord or self-employed individual, now is the right time to review your position and plan ahead.
Contact Parker Russell today on 020 7378 7500 or [email protected] to discuss how Making Tax Digital will affect you and how we can help you prepare.
