Despite rumours, delays and crossed fingers, HMRC has confirmed that Making Tax Digital (MTD) for Income Tax is still going live on 6 April 2026. That means getting comfortable with digital records and accounting software is no longer a “future problem” - it’s very much a now problem if you want to avoid headaches later.

Who needs to pay attention?

From April 2026, sole traders, self-employed individuals and landlords earning over £50,000 will need to:

• Keep digital records using accounting software
• Send quarterly updates to HMRC
• Submit a final year-end statement

Only self-employment and property income count towards the £50,000 threshold, dividends can sit this one out.

The scale of the change (and why HMRC is nervous)

HMRC estimates that around 864,000 taxpayers will be caught by the first wave of MTD for Income Tax. The issue? Roughly 40% of them don’t use an accountant or bookkeeper. That’s around 345,600 people expected to navigate digital reporting solo.

One sector stands out as particularly risky: construction. Many sole traders in the industry aren’t currently keeping detailed digital records, which makes the jump to quarterly reporting… optimistic, at best.

HMRC’s attempt to soften the landing

To their credit, HMRC seems aware this could be a bumpy start. They’ve backed initiatives like a partnership between Checkatrade and Sage, offering basic free MTD-compatible software to help sole traders get going.

They’ve also confirmed a key bit of reassurance:
There will be no penalties for missed quarterly updates in the first year.

That said, “no penalties” doesn’t mean “no expectations”. The training wheels won’t stay on forever.

What’s coming next?

The rollout doesn’t stop in 2026. Further phases are still planned:

• April 2027 – income over £30,000
• April 2028 – income over £20,000

So even if you’re not affected yet, you may well be in the future.

Does this change how much or when you pay tax?

No. MTD doesn’t change tax payment dates, only how often and how digitally you report your figures. That said, HMRC is fairly open about expecting better record-keeping to improve compliance (and yes, increase the tax they collect).

The takeaway

MTD for Income Tax is happening. The timetable hasn’t changed. And hundreds of thousands of sole traders and landlords will soon be expected to keep digital records and report quarterly (many without professional help).

Awareness may be improving, but readiness is still a real concern. Starting early, getting familiar with software, and building better habits now could make the difference between a smooth transition and a last-minute scramble.

MTD might not be exciting, but it’s firmly on the agenda.

Download our free MTD factsheet today and take the first step towards stress-free compliance. You can walk through each step and finally enjoy clarity with this part of your business.

Download your MTD Factsheet here

If anything’s unclear, you know where we are — just an email or call away, as always.

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Categories: Insights