Tax changes coming for sole traders in 2026 -Making Tax Digital for Income Tax – what small businesses need to know

Many sole traders and landlords will soon need to change how they report their income to HMRC.

From April 2026, Making Tax Digital for Income Tax (MTD ITSA) will apply to individuals with combined self-employment and property income above £50,000.

Those affected will need to:

• keep digital accounting records
• submit quarterly updates to HMRC
• complete an end-of-year final declaration

From April 2027, the threshold is expected to reduce to £30,000.

For many businesses the main change will simply be moving from spreadsheets or paper records to MTD-compatible accounting software such as QuickBooks, Xero or FreeAgent.

If you’re currently keeping manual records, it’s worth thinking about how you will manage the transition well before the deadline.