Digital Tax Is Coming: A Timeline for Sole Traders and Landlords

The government is pressing ahead with its digital transformation of the UK tax system. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)is being rolled out in stages, and over the next few years, it will affect millions of sole traders and landlords. If you're self-employed or earn rental income, it’s vital to understand how and when this change affects you.

Key Changes and Timeline:

🔹 April 2026 – MTD will apply to sole traders and landlords earning over £50,000.
🔹 April 2027 – The threshold will lower to include those earning over £30,000.
🔹 April 2028 – All self-employed individuals and landlords earning over £20,000will be required to comply.

What Will You Need to Do?

✅ Keep digital records of income and expenses
✅ Submit quarterly updatesto HMRC using MTD-compliant software
✅ File an End of Period Statement (EOPS)and a Final Declarationannually

What This Means for You

If you’re a sole trader or landlord above the income threshold, you’ll no longer be able to file a paper returnor use the traditional online Self Assessment system. Instead, you’ll need HMRC-approved softwareto report your income and expenses digitally throughout the year.

Get Ready Now

MTD is designed to improve accuracy and reduce tax errors, but it also means a shift in how you manage your finances. Whether you're over the threshold now or will be in future years, it’s a good idea to:

• Review your current record-keeping methods

• Speak to your accountant or tax advisor

• Start exploring MTD-compliant software

Staying ahead of the changes now will save time and stress later.

Disclaimer: Please be advised that the content of this blog is meant to serve as general information only, and should not be considered as tax advice. Given the complexity of tax laws and the potential for regulatory changes, it is strongly advised that you seek the guidance of a qualified tax professional or financial advisor prior to making any decisions based on the information contained in this blog. Please note that neither Gondal Accountancy nor its staff assume any responsibility or liability for any decisions made or not made as a result of the information presented in this article.