The next stage of Making Tax Digital (MTD) is finally coming into effect… and this time, it’s official.
From April 2026, the way many individuals report their income to HMRC will change. If you’re a sole trader or landlord earning over £50,000, this article breaks down what you need to know now, what’s changing and how Nordens is preparing to support you.
What is MTD for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC’s next step towards a fully digital tax system.
Currently, most self-employed individuals and landlords submit a single annual Self Assessment tax return. Under MTD ITSA, this will be replaced with:
- Quarterly digital submissions of income and expenses
- Use of MTD-approved software (such as Xero or QuickBooks, etc)
- An End of Period Statement (EOPS) and Final Declaration at year-end
This marks a major shift in how income tax is recorded, submitted and managed.
Why is this happening?
MTD is designed to:
- Reduce tax errors caused by manual processes
- Encourage better record-keeping
- Help HMRC manage tax compliance in real time
- Make life easier for taxpayers in the long run
Although MTD ITSA was originally meant to roll out years ago, it faced multiple delays. However, the government has now confirmed it will come into effect from April 2026 for higher earners, with a wider rollout in April 2027.
Who will be affected?
You will fall under MTD ITSA if:
- You are a sole trader or landlord
- Your total gross income from self-employment and/or property is over £50,000 (from April 2026)
- You submit a Self Assessment tax return
From April 2027, the rules will extend to those earning over £30,000.
What’s changing?
Here’s a quick comparison between the current system and what’s coming:
| Current System | MTD for Income Tax (2026 onwards) |
|---|---|
| One annual Self Assessment | Quarterly digital updates via MTD software |
| Paper or spreadsheet records | Digital record-keeping only |
| Manual calculations and filing | Automated submissions through linked software |
You will need to keep accurate, up-to-date records throughout the year using software that meets HMRC’s MTD standards.
Will HMRC contact me?
Yes. HMRC is expected to begin sending letters to individuals they believe fall within the scope of MTD ITSA. These letters will outline:
- What’s changing
- When you’ll need to comply
- What steps you should take now
If you receive a letter, don’t ignore it , it’s your early heads-up to start getting your records and systems in order.
How Nordens can help
At Nordens, we’re already preparing for MTD ITSA behind the scenes. Our Cloud Accounting team is in the process of developing tailored support packages to guide clients through the transition.
These will include:
- MTD software setup and training
- Quarterly reporting assistance
- Ongoing compliance support and advice
While the packages won’t launch just yet, we’ll be sharing more information later this year. In the meantime, if you’ve received a letter from HMRC or want to plan ahead, we’re here to support you.
Get ahead of the deadline
April 2026 may seem far off, but preparing early can save you time, money and last-minute stress.
📩 If you’d like to understand how MTD ITSA will impact you or want to speak to our team about getting set up, get in touch with our Cloud specialist, Hollie Watson – who’s our Cloud Manager, today.
Let’s make the transition simple – and take the guesswork out of tax.
