Do I Need Self Assessment or MTD for Income Tax? UK Guide for Sole Traders & Landlords (2026–2028) As the introduction of MTD for Income Tax 2026 approaches, it’s vital to understand which system you need to comply with.
If you’re a sole trader or landlord, you’ve probably heard that Making Tax Digital (MTD) for Income Tax is coming in from April 2026. The big question I get all the time is:
“Do I still file a Self Assessment return, or do I move to MTD?”
Let’s cut through the noise. I’ll explain what changes, who’s in, who’s out, and what to do next—without jargon.
A quick story to frame this
Last week I spoke to a client, a freelance designer who also rents out a flat. She said, “Dennis, I keep reading about MTD but I don’t know if it applies to me—or when.”
We did a five-minute check on her numbers and had a simple plan by the end of the call. No stress. That’s what this article will do for you too.
Self Assessment today (the familiar bit)
Right now, if you have untaxed income you file one return a year (Self Assessment) by 31 January. On it you report:
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Sole-trade profits and expenses
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UK property income
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Capital gains
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Dividends and other untaxed income
Simple rhythm: keep records → one annual return → pay your bill.
What’s changing with MTD for Income Tax?
From April 2026, some people will switch to a quarterly rhythm using MTD-compatible software. You’ll:
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Keep digital records for self-employment and/or property.
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Send four quarterly updates to HMRC during the year (just totals).
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Do a final year-end submission via software (still due by 31 January after the tax year).
Think of it as little check-ins through the year, then a final tidy-up at the end.
Who actually has to move—and when?
It depends on your qualifying income (explained next). HMRC looks at a prior year to decide when you join:
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If your qualifying income is over £50,000 in 2024/25, you start MTD from 6 April 2026.
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If it’s over £30,000 in 2025/26, you start from 6 April 2027.
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There’s also a planned extension to £20,000 based on 2026/27, aiming for April 2028.
If you’re under the threshold, you stay on Self Assessment for now.
What counts towards the threshold (qualifying income)?
Only two things:
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Gross sole-trader income (before expenses)
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Your share of UK property income (and if you’re UK-resident, overseas property can count too)
What doesn’t count for the threshold: PAYE salary, dividends, pensions, and your partnership share.
Joint property? Only your share of the rent counts. If a property earns £40,000 and you own half, £20,000 is your figure.
Common examples (so you can place yourself)
Example 1
2024/25: £40,000 sole trade + £15,000 property = £55,000 qualifying income.
→ You file a normal Self Assessment for 2024/25 (due 31 Jan 2026), then you’re in MTD from 6 April 2026.
Example 2
2024/25: £20,000 sole trade + £15,000 property + £20,000 dividends.
Qualifying income is £35,000 (dividends don’t count).
→ Under the 2026 trigger. If you repeat that in 2025/26, you’ll cross the £30k trigger for April 2027.
Am I exempt?
Some groups aren’t required to use MTD (at least for now), including partnerships, trusts/estates, and people who are digitally excluded (e.g., due to age, disability, remoteness, or religious grounds).
Digital exclusion isn’t automatic—you must apply, and HMRC has to agree. If in doubt, ask.
If you’re not mandated (i.e., you’re under the threshold), you simply carry on with Self Assessment.
Starting a new business or becoming a landlord—do I jump straight into MTD?
New sole trade: Not immediately. You’ll submit your first Self Assessment for that new source; HMRC then checks your totals and tells you when you need to start MTD (if at all).
Already in MTD for, say, property—and then you start a new trade?
You don’t have to bring the new trade into MTD until you’ve filed the first return that includes it. You can adopt it earlier if you like consistency, but it’s optional at that point.
New landlord: Same idea. Your first Self Assessment with property income goes in; HMRC then decides your start date if you’re over the threshold.
Can I leave MTD if my income later drops?
Generally, HMRC wants to avoid people dipping in and out. The rule of thumb: you need three consecutive tax years below the threshold before you can exit, unless you close the business or property source. (Voluntary testers can opt out, but that’s a special case.)
Why this matters now (even if you think 2026 is “ages away”)
Here’s the bit many miss: whether you’re in from April 2026 is based on what you report for 2024/25.
So the choices you make this year can tip you over or keep you under. If you’re close to the line, tidy bookkeeping and sensible planning help you avoid surprises.
What I’d do in your shoes (the practical plan)
Step 1 – Check your number
Add gross sole-trade income + your share of property rent for the relevant year. That’s it.
Step 2 – Map your start date
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Over £50k (2024/25)? → MTD from April 2026
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Over £30k (2025/26)? → MTD from April 2027
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Expect £20k+ (2026/27)? → likely April 2028
Step 3 – Get your records digital
Even if you’re not mandated yet, move to simple, compliant software now. You’ll thank yourself later—no shoebox panic, and quarterly updates will be two clicks instead of two evenings.
Step 4 – Decide who’s doing what
If you want us to handle sign-up, software, quarterly submissions and the final return, we’ll sort the lot. If you prefer a DIY approach, we’ll set you up, train you, and you run it—with us on standby.
Quick FAQs (real questions I get)
Do my dividends or PAYE wages push me into MTD?
No. Only gross sole-trade and property income count for the threshold.
I co-own a rental—do we count the full rent?
No—only your share.
Is there still a 31 January deadline?
Yes—there’s still an annual submission via software by 31 January after the tax year, plus the quarterly updates.
I’m not great with tech—can I get an exemption?
If you’re genuinely digitally excluded, you can apply. HMRC has to approve it.
Want the easy button?
If you’re not sure where you sit or you’re hovering near the thresholds, I’ll run your numbers and give you a plain-English plan:
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Eligibility check (are you in and when?)
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Software setup (simple, compliant, and tidy)
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Quarterly rhythm (mini-reviews so there are no year-end shocks)
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Final submission (we’ll wrap up the year and fold in things like dividends or capital gains neatly)
Book a 15-minute call and we’ll get you sorted.
Copy-and-keep checklist
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Work out qualifying income (sole trade + your share of property)
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Check which start date applies (2026 / 2027 / likely 2028)
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Pick MTD-compatible software and go digital now
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Decide DIY vs done-for-you support
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Put quarterly dates in the diary (we’ll set reminders)
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Keep receipts/invoices digital from today—future you will be grateful
Also if you want to read about the companies house changes in regards to ID verification then follow this link
