MTD ITSA: What Sole Traders & Landlords need to know for 2026

24 October 2025

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)

Is one of the biggest changes coming to the UK tax system and it’s just around the corner.


From April 2026, many sole traders and landlords will need to keep digital records and send quarterly updates to HMRC using MTD-compatible software.


If your income comes from self-employment or property, now’s the time to understand what’s changing and how to prepare.


What’s changing from April 2026?

Under MTD for Income Tax, you’ll no longer send a single Self Assessment tax return once a year.


Instead, you’ll need to:

  • Keep digital records of your income and expenses,
  • Send quarterly updates to HMRC using approved software,
  • Submit an end-of-year final declaration confirming your income.

This change aims to make tax reporting more accurate, more frequent, and less reliant on paper or manual entries.


Who will need to comply first?

MTD ITSA is being introduced in two stages:


  1. From April 2026: Sole traders and landlords with a total income of £50,000 or more (from self-employment and property combined) must join MTD.
  2. From April 2027: Those earning £30,000 or more will need to follow suit.


If your income is below £30,000, MTD won’t apply yet but it’s still worth getting digital systems in place early.


Why spreadsheets alone won’t be enough

Under MTD, your figures must flow digitally from your records to HMRC. That means you can’t simply copy and paste numbers from a spreadsheet you’ll need MTD-compliant bookkeeping software that can link directly to HMRC and submit your quarterly updates automatically. This digital connection ensures your data is accurate and reduces the risk of errors or missed deadlines.


How to prepare for MTD ITSA now

Getting ready early can save a lot of stress later. Here’s how to start:

✅ Review your record-keeping:
If you’re still using paper records or Excel, consider moving to a digital bookkeeping system now.

✅ Choose MTD-compliant software:
There are plenty of options — and we can help you choose the one that fits your business best.

✅ Organise your income sources:
HMRC looks at combined income from self-employment and property, so make sure you know your total.

✅ Get professional support:
Working with a bookkeeper experienced in MTD means you’ll have everything set up correctly from the start.


Avoid the 2026 rush get digital-ready now!

MTD might feel like a big change, but with the right support, it can make your finances smoother, clearer, and more efficient.

At Books & Business, we help sole traders, landlords, and small business owners set up digital bookkeeping systems that meet MTD requirements so you’re fully compliant before the April 2026 deadline.

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If you're a sole trader or landlord earning over £50,000 a year, big changes are coming your way. From April 2026, you'll need to comply with Making Tax Digital for Income Tax (MTD for ITSA) and while that might sound like it's a long way off, it’s closer than it seems. At Books and Business, we work closely with those in the trades and construction sector, and we know that admin is rarely top of the to-do list when you're running jobs, managing quotes, and keeping customers happy. But this change will affect how you keep records and report your income, so starting early is key. Lets get into what MTD for ITSA means for your business and more importantly how we can support you every step of the way.

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by PH186232 • 22 June 2025
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is coming, now is the time to get prepared! Whether you're a sole trader, subcontractor, or running a small limited company, choosing the right accounting software will keep you compliant and help you stay in control of your finances. But with so many options out there, how do you choose the best MTD software for your business? Here are some key features to look for: HMRC Compatibility The most important feature is that the software you choose is MTD compliant. It should link directly with HMRC so you can send updates digitally as well as meet other MTD obligations. Ease of Use Your time is best spent on-site, not buried in admin. Choose software that’s straightforward and suits your level of accounting knowledge. Look for mobile apps and dashboards that give you access on the go. Automation & Reporting The best systems will save you time by automating recurring tasks, like invoicing, expense tracking, and mileage logs as well as offering clear reports to help you understand where your money's going. Pricing & Scalability Think about where your business is headed. Can the software grow with you? Choose a platform that fits your budget now, but also supports features like payroll, CIS returns, or multiple users down the line. What are the most popular software options: QuickBooks – A popular option for trades and small business owners, offering strong mobile tools and CIS features. Xero – Great for real-time visibility, simple bank feeds, and job costing add-ons. FreeAgent – Perfect for sole traders and subcontractors, especially those who like things kept simple. Sage – Well-established and ideal if you’re looking for a more traditional setup with solid support. You’ve chosen the software but why make the switch now If you’re still using spreadsheets or a paper-based system, we cannot stress enough that now is the time to go digital . Getting ahead of the MTD deadlines gives you time to learn the software, avoid penalties, and work out any teething problems before submissions are mandatory. A quick note to be aware ...... some banks now include accounting software when you open a new business account. However, it’s advisable to do your research first to ensure the software they are offering meets your business needs. We can help with your MTD journey; we offer a variety of packages to suit each individual’s needs, from basic set up to regular training or just ad hoc training on any areas you may be getting stuck with, we also offer full packages where we can do it all for you. Get in touch for more information.