With less than a year to go, sole traders and landlords earning over £50,000 will be required to use the new Making Tax Digital (MTD) for Income Tax from April 6, 2026. This significant change towards digital record-keeping and income reporting to HM Revenue and Customs (HMRC) is set to save these people considerable time.

By maintaining digital records throughout the year, sole traders and landlords can save precious hours previously spent collating information at tax return time, the Government claims. This allows them to dedicate more time to their business activities, thereby driving economic growth as part of the 'Plan for Change'.

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HMRC estimates that approximately 780,000 self-employed people and landlords will be required to use MTD for Income Tax from April 2026, with an additional 970,000 joining from April 2027.

The introduction of quarterly updates will distribute the workload more evenly throughout the year, bringing the tax system closer to real-time reporting. This will assist businesses in managing their finances more effectively and avoid the last-minute rush.

HMRC is encouraging eligible customers to sign up for a testing programme on GOV.UK and start preparing now. Agents can also register their clients via GOV.UK.

James Murray MP, the Exchequer Secretary to the Treasury, said: "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share.

"This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth."

Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax.

"By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year."

Come April 2026, individuals whose qualifying income exceeds £50,000 will need to maintain digital records, employ MTD-compatible software, and submit quarterly financial summaries to HMRC, reports the Daily Record.

The Government says these digital requirements will help businesses save time through more efficient record-keeping, reduce errors in tax calculations, and provide a clearer picture of their tax obligations throughout the year.

Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted. Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease to £20,000 from April 2028.

The phased introduction of MTD for Income Tax follows the successful implementation of MTD for VAT, which now helps more than two million businesses reduce errors and save time on their tax affairs. Businesses which joined the MTD for VAT testing phase were better prepared for the move to quarterly reporting.

An independent report published in 2021 found that 69 per cent of mandated businesses experienced at least one benefit from MTD for VAT, while 67 per cent reported that it reduced the potential for mistakes in their record keeping.