HMRC has begun contacting sole traders and landlords who will be required to join Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) from April 2026.
The new rules will apply to landlords who declare gross rental income above £50,000 in their 2025 self assessment tax return, so if you have received a notification from HMRC, this is likely the reason.
Here is a summary of what MTD will means for sole traders and landlords alike:
- Digital record‑keeping
You must keep your business income / rental income and expense records in a digital format using software compatible with HMRC. - Quarterly reporting
You will need to submit a quarterly summary of your rental income and allowable expenses. The first quarterly update will be due on 7 August 2026, covering the period 6 April – 5 July 2026. - End‑of‑period statement (EOPS)
After the end of the tax year, you will need to finalise your business and rental figures and submit an EOPS. - Final declaration
This replaces the annual self assessment tax return and confirms all income for the year.
Penalties for late submissions
HMRC will use a points‑based penalty system for late MTD submissions:
- You receive one penalty point for each missed deadline (e.g., a quarterly update).
- Once you reach 4 points for quarterly submissions, HMRC issues a £200 penalty, and each further late submission while at the threshold triggers another £200 penalty.
- Soft‑landing for the first year (2026/27): HMRC will not apply penalty points for late quarterly updates during the first year of MTD for ITSA. This applies only to quarterly submissions; late final declarations can still attract penalty points.
Next steps
We can support you with as much of the process as you wish – from choosing suitable software, to preparing and submitting quarterly reports, to handling all year-end requirement.
Please contact your personal tax manager to discuss your options.
Trusts, IHT and estate planning 
Xero Gold Partners 
Business services 
Corporate tax 
