Making Tax Digital for Income Tax: Are You Still on Track?
If you're a sole trader or a landlord, you've probably heard something about Making Tax Digital for Income Tax, or MTD for ITSA. You might have pushed it to the back of your mind, after all, it’s not mandatory for me just yet, but ignoring it won’t make it go away.
MTD for ITSA is HMRC’s way of moving self-assessment into the digital age. It means you’ll need to keep digital records and send updates to HMRC throughout the year, not just once in January. Gone are the days of handwritten ledgers or spreadsheets saved in random folders. To stay compliant, you’ll need to use MTD-compatible software that links directly to HMRC - such as Quick Books or Xero or Spreasheet linking software.
The rollout is happening in stages.
From April 2026, MTD for ITSA will apply to sole traders and landlords with more than £50,000 in total income. That’s not your profit, it’s your gross income, before any expenses are taken off.
From April 2027, the threshold drops to £30,000.
From April 2028, the threshold drops to £20,000.
So, what exactly will you need to do?
1. keep your income and expenses in digital format, either in accounting software or spreadsheets that are linked to bridging software
2. send quarterly updates to HMRC showing your business performance
3. submit a final declaration to confirm everything is accurate at the end of the year
It’s a new routine, and it’s going to take some getting used to.
I know a lot of small sole traders are thinking, “That’s over a year away, I’ll worry about it later.” But here’s the thing, if you get to grips with things early, there will be much less stress when it comes around.
By preparing now, you can figure out what works for you, try out different systems, and ask questions before you're under pressure. It also gives you a chance to tidy up your record-keeping, so you’re not rushing when the deadline arrives.
If you’re not sure where to start, you’re not alone. Many people I work with feel confused about whether they need to register, what software they need to use, or how quarterly updates will actually work.
That’s where I can help. I’ll help you figure out whether MTD applies to you, get your systems in place, and make the whole process feel a lot less intimidating.
My goal isn’t to throw jargon at you, it’s to make things easier. If you want someone to walk you through it or just help you stay on the right track, I’m here. Whether you're planning to do it yourself or would rather hand it over, I’ve got options to suit how you like to work.
Now is the perfect time to check the figures on your last self assessment return, explore your options, and make sure you're not caught off guard.
So what should you do today?
1. Start by checking your total self-employed and rental income on your 24/25 self assessment.
2. Check if you receivde a letter from HMRC stating you are eligible for April 2026 sign-up
2. Consider how you’re currently keeping your records. Are they digital? Could you easily send updates to HMRC if required? And if the answer is “no” or “I’m not sure,” then it’s time to take action.
Visit www.purplebookkeeping.com to learn more about how I can help. Whether you need support with setup, software, or ongoing bookkeeping, you don’t have to figure it all out alone.
Let’s get ahead of the changes together, before they become urgent.
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