HMRC’s ‘Making Tax Digital’ programme is a key element of HMRC’s digital transformation plans. This flagship project, first announced in 2015, is being phased in over a number of years. Making Tax Digital (MTD) for VAT was the first element of the programme to be rolled out, beginning in April 2019. Making Tax Digital (MTD) for Income Tax is now due to be introduced in phases, beginning in April 2026.
HMRC have warned Sole traders and landlords with an income over £50,000 that there is less than a year before they will be required to use Making Tax Digital for Income Tax (MTD for IT).
The scheme requires businesses within scope to maintain records digitally, meaning that a digital record-keeping system will need to be used. This can be either specific accounting software or spreadsheets with bridging software to link to HMRC’s site.
Quarterly returns will also need to be submitted, declaring business/property income and expenses for the period
HMRC says the launch of MTD for IT on 6 April 2026 will mark a significant and time-saving change in how these individuals will need to keep digital records and report their income to the tax authority.
HMRC says that by keeping digital records throughout the year, sole traders and landlords can save hours previously spent gathering information at tax return time – allowing them to spend more time focusing on their business activities.
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