If you’re a sole trader or landlord earning over £50,000 a year from self-employment or property, you need to use Making Tax Digital for Income Tax (MTD for ITSA). What’s more, those earning over £20,000 may have to comply sooner than you think. In this guide, we’ll walk you through what MTD is, who it affects and exactly how to get signed up.
What is Making Tax Digital (MTD)?
MTD is the government’s way of making tax simpler, faster and less error prone. Instead of relying on manual calculations and paper forms, MTD requires digital records and software to submit your tax information directly to HMRC.
Income Tax reporting for MTD is being introduced in stages, starting with those earning over £50,000, before gradually including those earning over £20,000. You can sign up early if you want to get ahead of the game.
Do you need to sign up?
You need to sign up if you earn over £50,000 a year from self employment or property income. If you're not yet required to, you can still sign up early to get ahead.
Those earning over £30,000 will need to comply by April 2027 and the scheme will be rolled out to those earning over £20,000 from April 2028.
How to Sign Up for Making Tax Digital for Income Tax
MTD for Income Tax currently only applies to those earning over £50,000 but you can still sign up early to get ready. This includes:
- Sole traders
- CIS subcontractors
- Landlords
Before you sign up, you’ll need:
- National Insurance number
- Business start date/date you started receiving property income
- Accounting method (cash basis or traditional)
- Business name, address and trade (for sole traders)
- Software that works with MTD for Income Tax
And remember, you’ll sign up for each income source separately, if you have more than one.
How to sign up
- Use your Self Assessment user ID & password. This is the same login you use to file your Self Assessment tax return online.
- Confirm your identity via the HMRC app or by answering questions about your personal info.
- Follow the instructions on the portal.
You’ll still need to complete a final traditional Self Assessment tax return for the previous tax year, because this refers to money before the MTD rules. And this is the case whether you must comply with MTD now or you just sign up early.
What happens next?
Once signed up, you’ll:
- Need MTD-compliant software
- Keep digital records
- Send quarterly updates
- Submit your tax return and pay by 31 January the following year
Penalties and deadlines still matter but HMRC will notify you about these.
Can an accountant sign up for you?
Yes! Your accountant can register for Income Tax, but you’ll need to approve them via your Government Gateway account. They can then submit returns and updates on your behalf, using MTD-compatible software.
Who can’t sign up?
People with:
- A payment plan with HMRC
- Partnership income
- Certain allowances (e.g., Married Couple’s, Blind Person’s)
- Income from trusts, fostering or shared lives schemes
- Bankruptcy, insolvency or compliance enquiries
- Income averaging arrangements (e.g., farmers, artists)
Need help getting started?
Coconut makes it easy. Our MTD app helps sole traders and landlords:
- Track income and expenses in real time
- Photograph receipts on the go
- Send and track professional invoices
- Invite your accountant to see activity in seconds
- Send MTD updates directly to HMRC
Ready to get compliant? Or just want to simplify reporting and get ahead? Start your free trial today and make MTD hassle-free.
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