Do I need to register for MTD ITSA? The sole trader's guide for 2026

Making Tax Digital for Income Tax Self Assessment launched in April 2026 — but one of the most common questions we still get is a simple one: do I actually need to do this? The answer depends on your income, your situation, and whether any exemptions apply to you.

This guide covers exactly who needs MTD ITSA in 2026, who doesn't, and what the different phases mean for sole traders and landlords.

What is MTD ITSA?

MTD ITSA stands for Making Tax Digital for Income Tax Self Assessment. It's HMRC's requirement for self-employed people and landlords to keep digital financial records and submit quarterly updates to HMRC — replacing the old once-a-year Self Assessment tax return.

For a full explanation of how MTD works, read our guide on what is MTD ITSA?.

Who needs to register for MTD ITSA right now?

MTD ITSA is currently mandatory for:

• Sole traders with total gross income from self-employment over £50,000 per year
• Landlords with total gross rental income over £50,000 per year
• Anyone with combined self-employment and rental income over £50,000 per year

If your income exceeds this threshold, you were required to join MTD ITSA from 6 April 2026. If you haven't registered yet, you should do so as soon as possible to avoid falling behind on your quarterly submission deadlines.

Who needs to register in 2027?

The second phase of MTD ITSA extends the requirement to:

• Sole traders and landlords with income between £30,000 and £50,000 per year

This group must join from 6 April 2027. If you fall into this bracket, now is a good time to start getting your records in order rather than waiting until the last minute.

Who is currently exempt from MTD ITSA?

You do not currently need to register for MTD ITSA if:

• Your self-employment or rental income is below £30,000 per year (this group has no confirmed start date yet)
• You are employed only and have no self-employment or rental income
• You are a partner in a partnership — partnerships have their own separate MTD timeline which has not yet been confirmed
• You have been granted an exemption by HMRC — for example, due to age, disability, or a religious objection to using computers

If your income is close to the £50,000 threshold, note that HMRC uses your gross income — before expenses — to determine eligibility, not your profit.

What counts towards the income threshold?

HMRC adds together all your qualifying income sources to determine whether you meet the threshold:

• All self-employment income (before expenses)
• All rental income (before expenses)
• Income from multiple self-employment businesses is combined

For example, if you earn £35,000 from freelance work and £20,000 from renting a property, your combined qualifying income is £55,000 — above the £50,000 threshold and therefore in scope for MTD ITSA now.

What if my income varies year to year?

MTD ITSA eligibility is assessed based on your income in the previous tax year. So if your 2024/25 Self Assessment return showed income above £50,000, you were required to join from April 2026.

If your income drops below the threshold in a future year, you may be able to apply to leave MTD ITSA — though HMRC has not yet published a full process for this.

What happens if I don't register?

Failing to register when required can result in:

• Penalty points for missing quarterly submission deadlines
• A £200 fine once you accumulate 4 penalty points
• Additional fines for each further missed deadline
• Potential HMRC investigation if your records are found to be non-compliant

The sooner you register and get the right systems in place, the better. See our full guide to MTD ITSA quarterly deadlines and penalties for more detail on how the penalty system works.

What do I need to do to comply with MTD ITSA?

Once registered, you need to:

1. Keep digital records of all your business income and expenses — paper records and disconnected spreadsheets are not sufficient
2. Submit quarterly updates to HMRC summarising your income and expenses — four times per year
3. Submit a final declaration each January confirming your figures and claiming any additional reliefs

You'll need MTD-compatible software to do this. At TaxChill, we handle all of this for you — connecting your bank feeds, categorising your transactions, and submitting quarterly updates directly to HMRC on your behalf.

Do I need an accountant or bookkeeper for MTD?

Not necessarily — but most sole traders find the quarterly submission process significantly easier with professional help. Read our honest guide on whether you need an accountant for MTD ITSA to work out what's right for you.

If you decide to handle it yourself, make sure you understand what expenses you can and can't claim. Our complete sole trader expenses list is a good starting point.

Frequently asked questions about MTD ITSA eligibility

I earn under £50,000 — do I need to do anything now?

Not yet. If your income is below £50,000 you don't need to join MTD ITSA until April 2027 at the earliest. However, now is a good time to start keeping digital records so you're ready when the time comes.

Does MTD ITSA apply to my side income?

If your total self-employment and rental income exceeds £50,000, yes — even if most of your income comes from employment. All qualifying sources are combined to assess the threshold.

I already submit a Self Assessment return — do I still need to do MTD?

Yes. MTD ITSA replaces Self Assessment for those in scope. Instead of one annual return, you'll submit four quarterly updates and a final declaration. Your annual January deadline for the final declaration stays the same.

Can I get an exemption from MTD?

HMRC grants exemptions in limited circumstances — if you're digitally excluded due to age, disability, or location (for example, no reliable internet access), or if you have a religious objection to using computers. Contact HMRC directly to apply for an exemption.

What is the MTD ITSA income threshold for 2027?

From April 2027, the threshold drops to £30,000. Anyone with qualifying income between £30,000 and £50,000 will be required to join at that point.

Not sure whether MTD applies to your specific situation? Book a free call with us — we'll go through your income and circumstances and give you a straight answer.