For years, Self Assessment has worked in a fairly simple way.
You keep records during the year (or scramble to find them in January), submit one tax return, and pay whatever tax is due.
That system is about to change.
From April 2026, hundreds of thousands of sole traders and landlords will move into Making Tax Digital for Income Tax (MTD IT) — a new way of reporting income to HMRC that replaces the traditional “once-a-year” tax return process.
Instead of sending everything at the end of the tax year, income and expenses will be reported throughout the year using digital records and quarterly updates.
For some people the change will feel big. For others, it will simply mean using software instead of spreadsheets or paper.
Either way, the way Self Assessment works is evolving. Here’s what you need to know.
According to GOV.UK’s overview of Making Tax Digital, the programme is designed to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
What Is Making Tax Digital?
Making Tax Digital is HMRC’s long-term plan to modernise the UK tax system.
The idea is straightforward:
- move tax records into digital systems
- reduce mistakes caused by manual entry
- give taxpayers a clearer view of their tax position during the year
MTD has already been introduced for VAT. Now it’s expanding to income tax for individuals.
The programme specifically targets people who currently submit Self Assessment tax returns for:
- self-employment income
- property rental income
Who Will Be Affected First?
The rollout is happening in stages.
From April 2026
Individuals with qualifying income over £50,000 from self-employment or property will need to follow the new rules.
From April 2027
The threshold falls to £30,000.
From April 2028
The system is expected to expand further to people earning over £20,000.
This means that over time millions of taxpayers will move into MTD.
The phased rollout thresholds are confirmed in GOV.UK’s guidance on Making Tax Digital for Income Tax, which details who will need to comply and when.
What Will Actually Change?
The biggest change is how often income information is sent to HMRC.
Instead of one tax return per year, there will be several updates.
Typical reporting under MTD will involve:
- four quarterly updates
- an end-of-year declaration
- maintaining digital records throughout the year
These quarterly updates summarise income and expenses for each period.
They are not full tax returns, but they give HMRC a running picture of how a business is performing.
What Happens to the Self Assessment Tax Return?
Self Assessment isn’t disappearing completely.
Instead, it’s evolving.
At the end of the tax year, you’ll still submit a final declaration confirming your income and any adjustments.
Think of it as replacing the traditional tax return, but supported by updates that have already been submitted during the year.
The final tax deadline remains the same — typically 31 January following the end of the tax year.
Digital Records Become Mandatory
One of the most important parts of Making Tax Digital is record-keeping.
Businesses affected by the rules must keep digital records of income and expenses.
That doesn’t necessarily mean complicated accounting systems.
But it does mean records must be kept in compatible software, rather than purely on paper.
This allows information to be submitted directly to HMRC.
HMRC sets out the requirements for compatible software that can be used to keep digital records and submit quarterly updates under Making Tax Digital for Income Tax.
Why HMRC Is Making This Change
The shift to digital reporting is part of a wider effort to reduce what HMRC calls the “tax gap” — the difference between tax owed and tax actually collected.
According to HMRC estimates, mistakes in record-keeping account for a significant portion of lost revenue.
Digital systems are intended to reduce those errors and provide clearer information throughout the year.
For taxpayers, the aim is to make tax more predictable, rather than something that only becomes clear once a return is submitted.
What This Means for Sole Traders
For sole traders, the biggest practical change is moving away from the annual tax scramble.
Many businesses currently leave bookkeeping until close to the Self Assessment deadline.
Under MTD, that approach becomes much harder.
Because updates are submitted during the year, records need to be maintained regularly rather than once a year.
For many businesses, this may actually make things easier. Instead of one large administrative task each January, the workload is spread across the year.
What This Means for Landlords
Landlords with rental income above the threshold will also need to follow MTD rules.
That means:
- tracking rental income digitally
- recording allowable expenses
- submitting quarterly summaries
For landlords with multiple properties, this could actually simplify reporting, since income and expenses are tracked continuously rather than reconstructed at the end of the year.
Will Tax Payments Change?
One common concern is whether MTD means paying tax four times a year.
In most cases, it doesn’t.
The quarterly updates report information, but they don’t automatically trigger tax payments.
The final tax bill is still calculated at the end of the tax year.
So while reporting becomes more frequent, payment deadlines largely remain the same.
Why Preparation Matters
Although April 2026 may seem some time away, preparation is important.
Businesses that already:
- track income digitally
- record expenses regularly
- keep organised records
will find the transition relatively straightforward.
Those relying on paper records or end-of-year bookkeeping may need to adjust how they work.
The earlier those habits change, the easier the move to MTD will be.
The Bigger Picture
Making Tax Digital represents one of the largest structural changes to the UK tax system in decades.
While the move to digital reporting may initially feel like more administration, the long-term goal is a tax system that works more smoothly and reduces unexpected bills.
For many businesses, the real shift is not technology but timing. Tax information will move from an annual event to something that is managed continuously throughout the year.
Summary
Making Tax Digital for Income Tax will begin rolling out in April 2026, starting with individuals earning more than £50,000 from self-employment or property income.
Under the new system, taxpayers will keep digital records and submit quarterly updates to HMRC, followed by a final end-of-year declaration replacing the traditional Self Assessment return.
The changes are designed to improve accuracy and give taxpayers a clearer view of their tax position throughout the year.
While reporting will become more frequent, tax payments generally remain aligned with existing Self Assessment deadlines.
Preparing early by keeping digital records and tracking income consistently will make the transition to Making Tax Digital significantly easier.