 MTD ITSA, Making Tax Digital, HMRC, Landlords, Self Employed HMRC’s New MTD for Income Tax Starts in April 2026: What Landlords and the Self-Employed Need to Do Now
For many landlords and self-employed people, tax has always meant one main rush each year. That is changing. From 6 April 2026, HMRC’s new Making Tax Digital for Income Tax (MTD ITSA) rules begin for many sole traders and landlords. If you are affected, you will no longer be able to just leave everything until the end of the tax year. Instead, you will need to keep digital records and send quarterly updates to HMRC using compatible software. This is a major shift, and many people are still underestimating how much work, organisation and accuracy it will really require. That is exactly why now is the right time to get proper help. What Is HMRC’s New MTD for Income Tax From April 2026? From 6 April 2026, many landlords and self-employed people with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC using compatible software. HMRC’s test is based on your qualifying income, which means your gross income from self-employment and property before expenses, not your profit. If your combined qualifying income is above £50,000 for the 2024/25 tax year, you may need to join MTD for Income Tax from 6 April 2026. This is not just a software change. It is a new reporting habit, a new compliance system and, for many people, a new source of pressure unless it is set up properly from the beginning. Who Will Be Affected First? From 6 April 2026, MTD for Income Tax applies to sole traders and landlords whose total qualifying income from self-employment and property is over £50,000 based on the 2024/25 tax year. From 6 April 2027, the threshold drops to over £30,000 based on the 2025/26 tax year, and HMRC has also said that those with qualifying income over £20,000 will be brought in from 6 April 2028. This means:
One of the biggest misunderstandings is this: HMRC is looking at gross income, not profit. So if you earn £28,000 gross from self-employment and £24,000 gross from property, your combined qualifying income is £52,000, which means you are likely in scope from April 2026. What Will You Actually Have To Do? If you are caught by the new rules, you or your agent will need to use MTD-compatible software to:
The key dates HMRC has published for those joining from April 2026 include:
Importantly, the 2025/26 tax year is still filed in the usual Self Assessment way by 31 January 2027, because that tax year ends before MTD begins. And MTD ITSA does not record other types of income such as savings interest, dividends, CGT, overseas, wages etc. Why This Feels Much Bigger Than “Just Software” A lot of articles online make MTD sound like a basic software upgrade. It is not. For many landlords and self-employed people, this will mean changing from a once-a-year tax mindset to an every-quarter compliance routine. That means more deadlines, more record keeping, more chances to get behind, and more pressure if the books are not tidy from the start. HMRC’s guidance makes clear that you must use compatible software, keep digital records and submit quarterly updates before you can complete the end-of-year process. Why Cheap Software Alone Is Not the Answer HMRC does not provide its own MTD software for Income Tax. Instead, taxpayers must choose from compatible third-party software. HMRC says there are free and paid options, but software being “compatible” does not mean it will choose the right treatment for you, keep you fully organised, or make the best tax decisions on your behalf. This is where many people will get caught out. Software can help you enter figures. It does not replace judgement or tax knowledge and experience - which saves you tax. It does not tell you:
Cheap software may look attractive at the start, but if the bookkeeping is poor or the tax treatment is wrong, it can cost far more later in stress, overpaid tax, missed claims, corrections and HMRC problems. Why Using Tax Affinity Is the Smarter Option The best approach for most landlords and self-employed people is not to struggle through this alone and hope for the best. It is to get the system set up properly from the start. At Tax Affinity Accountants, we do not just tell clients to buy software and get on with it. We help make the whole process practical, compliant and manageable. That means we can help you:
For many people, that is the real value. Not “having software”. Having the right accountant behind the software. A Simple Step-by-Step Plan Step 1: Check if you are in scope Look at your 2024/25 gross income from self-employment and property. If the combined figure is over £50,000, you should be preparing now for April 2026. Step 2: Do not wait for panic season If you leave this until the last minute, you are far more likely to choose the wrong process, keep poor records and end up stressed by the first quarterly deadline. Step 3: Get your bookkeeping method sorted You need a clean digital method that works in real life, not just in theory. HMRC says you need compatible software, but choosing software is only one part of getting ready. Step 4: Let a specialist review your position This is especially important if you have:
Step 5: Let Tax Affinity handle it properly The safest route is to let an experienced accountant set the system up, review the records and manage the compliance process with you. What About Penalties? HMRC has announced an easement for those who are mandated into MTD from April 2026: it will not apply penalty points for late quarterly updates for the first 12 months. But that does not mean quarterly updates can be ignored. HMRC still requires them, and they must be submitted before the year-end process can be completed. Penalties can still apply for late tax returns and late payment. So the message is simple: Do not confuse “temporary softening of penalties” with “this is not important.” It is important. Very. Does This Apply To Limited Companies? No. HMRC’s current MTD for Income Tax rollout from April 2026 is for sole traders and landlords in scope, not limited companies. Partnerships are expected to be brought in later, but they are not part of the April 2026 start. Final Thought: This Is Not the Time to Wing It This change is coming. HMRC has confirmed that it is going ahead from 6 April 2026, and it has already said that hundreds of thousands of sole traders and landlords will be affected. For some people, MTD will be manageable. For others, it will become a cycle of missed deadlines, messy records and frustration. The difference will often come down to one decision: Do you try to patch it together yourself with cheap software, or do you get it set up and reviewed properly from the start? At Tax Affinity Accountants, we help landlords and self-employed clients make this transition in a way that is clear, controlled and tax-efficient. Speak to Tax Affinity Before April 2026 If you are a landlord or self-employed and think the new MTD rules may apply to you, now is the right time to act. We can help you:
Contact Tax Affinity Accountants today and let us help you get ready properly. About the Author Written by Anni Khan, Tax Affinity Accountants Reviewed by Andrew Khan, Principal Accountant, Tax & Forensic Accounting Specialist, Recognised tax agent authorised to act on clients’ behalf with HMRC. Tax Affinity Accountants are UK-based tax and accountancy specialists supporting individuals and SME businesses. With offices in Worcester Park, Kingston upon Thames, and Epsom & Ewell, they act for clients across the UK and internationally, providing compliant, HMRC-focused tax advice and support. For more information, visit www.taxaffinity.com or read more insights at www.taxaffinity.com/blog. Important Notice This article is for general information purposes only and does not constitute personalised tax advice. Tax treatment depends on individual circumstances. Professional advice should be sought before taking action. #MTD #ITSA, #MakingTaxDigital, #HMRC, #Landlords, #SelfEmployed, #SoleTraders, #IncomeTax, #QuarterlyUpdates, #April2026, #TaxAffinity, #PropertyTax, #SelfAssessment #accountant
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 The UK Spring Statement 2026 highlights a growing trend in the UK tax system: increasing tax revenues through frozen thresholds and rising investment tax rates rather than dramatic headline tax rises.
For business owners, self-employed professionals, property investors and high-net-worth individuals, the next few years could bring higher effective tax bills unless proactive planning is put in place now. This guide explains the most important tax changes announced or confirmed in the Spring Statement and upcoming reforms starting from April 2026. Quick Summary: Spring Statement 2026 Tax Changes For those wanting a fast overview, here are the key takeaways: • Income tax thresholds remain frozen, increasing tax through fiscal drag • Dividend tax rates rise in April 2026 • Savings and property income tax rates increase in April 2027 • Making Tax Digital expands in April 2026 • Personal allowances will be re-ordered across income types • Long-term tax pressure is increasing on investors, landlords and company directors These developments mean forward tax planning is becoming essential for entrepreneurs and investors. What Was the Main Message from the Spring Statement 2026? The government’s economic strategy focuses on: • Maintaining fiscal stability • Controlling borrowing • Increasing tax revenues gradually • Encouraging long-term economic growth However, rather than introducing major tax rises immediately, the government is relying heavily on stealth taxation through frozen allowances and adjustments to investment income taxation. For many taxpayers, this means paying more tax even if tax rates appear unchanged. How Frozen Tax Thresholds Are Increasing Your Tax Bill One of the biggest hidden tax increases comes from the continued freeze on income tax thresholds. The key thresholds currently remain: 20% Tax - After Personal Allowance £12,570 40% Tax - Higher Rate £50,270 45% Tax - Additonal Rate £125,140 These thresholds are expected to remain frozen until 2031. As wages, dividends and business profits increase over time, more individuals will gradually move into higher tax brackets. This effect — known as fiscal drag — is expected to bring millions more taxpayers into higher tax bands over the next few years. For entrepreneurs and professionals whose income grows annually, the impact can be significant. Dividend Tax Is Increasing from April 2026 Company directors and investors will see a notable rise in dividend taxation from April 2026. New dividend tax rates from April 2026 Basic Rate 8.75% rises to 10.75% Higher Rate 33.75% rises to 35.75% Additional Rate 39.35% rises to 39.35% At the same time, the Dividend Allowance remains just £500, meaning most dividends are now taxable. Why this matters for company directors Many business owners extract profits through dividends instead of salary because it has historically been tax efficient. With higher dividend tax rates, business owners may need to reconsider: • Profit extraction strategies • Pension contributions • Dividend timing before April 2026 • Use of family shareholdings Even modest dividend income could now produce meaningfully higher tax bills. Tax on Savings and Property Income Will Rise in 2027 Another change confirmed in recent fiscal announcements affects investment income from April 2027. Tax rates on savings and property income will increase by two percentage points across all tax bands. Example from April 2027: Savings Income 20% rises to 22% Property Income 20% rises to 22% Higher-rate and additional-rate taxpayers will also face higher rates. For landlords and investors, this change reduces after-tax investment returns. Combined with mortgage costs and regulatory pressures, the UK property sector is becoming significantly more tax intensive. How Personal Allowances Will Change in 2027 Another lesser-known tax change will affect how personal allowances are applied. From April 2027, allowances will automatically be allocated in the following order:
The change means investment income may become taxable sooner, particularly for individuals with multiple income streams. Making Tax Digital Expands in April 2026 The government is continuing its digital tax transformation through Making Tax Digital for Income Tax (MTD ITSA). From April 2026, self-employed individuals and landlords with annual income above £50,000 must: • Maintain digital accounting records • Submit quarterly updates to HMRC • Use approved digital software This is a major shift from the traditional annual self-assessment system. Businesses that still rely on spreadsheets or manual bookkeeping should begin transitioning to cloud accounting systems or use an established tax accountant like Tax Affinity well before the deadline. What These Changes Mean for High-Net-Worth Individuals HNWIs are particularly exposed to the evolving tax landscape. Key risks include: • Higher dividend tax on large investment portfolios • Increased taxation on savings income • Greater tax exposure from frozen allowances • Future inheritance tax pressures due to frozen thresholds Strategic planning is therefore essential to protect wealth and manage long-term tax exposure. Smart Tax Planning Opportunities Before 2026 Although tax burdens are increasing, there are still powerful planning opportunities available. 1. Extract dividends before rate increases - Company directors may benefit from timing dividend distributions before April 2026. 2. Increase pension contributions - Pensions remain one of the most tax-efficient wealth planning tools in the UK. 3. Use ISA allowances - Investment income inside ISAs remains free from income tax and capital gains tax. 4. Family tax planning - Transferring assets or shares between spouses can reduce household tax exposure. 5. Business structure reviews - Some entrepreneurs may benefit from reviewing whether their business structure remains optimal. The Key Takeaway from the Spring Statement 2026 The UK government is not dramatically increasing headline tax rates. Instead, it is gradually increasing tax revenues through: • Frozen thresholds • Rising investment tax rates • Reduced allowances • Expanding tax reporting requirements For business owners, investors and self-employed professionals, the result is the same: higher tax bills unless proactive planning takes place. Expert Tax Planning for Business Owners and Investors At Tax Affinity Accountants, we help clients stay ahead of tax changes through proactive advice and strategic planning. Our clients include: • Business owners and entrepreneurs • Self-employed professionals • Property investors • Company directors • High-net-worth individuals If you want to reduce your tax exposure and plan effectively for the upcoming 2026 and 2027 tax changes, our expert advisers are here to help. #SpringStatement2026 #UKTaxChanges #DividendTaxIncrease #TaxPlanningUK #BusinessOwnersUK #SelfEmployedUK #MTD2026 #PropertyInvestorUK #HNWIPlanning #UKAccountants #FinancialPlanningUK About the Author - Written by Anni Khan, Tax Affinity Accountants Reviewed by Andrew Khan, Principal Accountant, Tax & Forensic Accounting Specialist, Recognised & authorised to act on clients’ behalf with HMRC & Companies House. Tax Affinity Accountants are UK-based tax and accountancy specialists supporting individuals and SME businesses. With offices in Worcester Park, Kingston upon Thames, and Epsom & Ewell, they act for clients across the UK and internationally, providing compliant, HMRC-focused tax advice and support. For more information, visit www.taxaffinity.com or read more insights at www.taxaffinity.com/blog. Important Notice: This article is for general information purposes only and does not constitute personalised tax or company formation advice. Company law and fees can change; professional guidance should be sought based on your individual circumstances. Schema-Optimised FAQ Section Spring Statement 2026 FAQs What is the UK Spring Statement 2026? The Spring Statement 2026 is the UK government’s fiscal update outlining the latest economic forecasts, tax policy direction and public spending plans. While it typically introduces fewer tax changes than the Autumn Budget, it provides important updates that affect business owners, investors and taxpayers planning for the coming financial years. Will taxes increase after the Spring Statement 2026?Although major headline tax rises were not introduced, several changes will increase tax liabilities over time. These include frozen income tax thresholds, higher dividend tax rates from April 2026 and increased tax on savings and property income from April 2027. What are the new dividend tax rates from April 2026?From April 2026 the dividend tax rates will increase to:
How does the dividend tax increase affect company directors?Many company directors pay themselves through a combination of salary and dividends. Higher dividend tax rates may reduce the tax efficiency of this strategy, meaning directors may benefit from reviewing their profit extraction approach, pension contributions and dividend timing before April 2026. What is fiscal drag and how does it affect UK taxpayers?Fiscal drag occurs when tax thresholds remain frozen while income rises. As wages and profits increase over time, more income is pushed into higher tax brackets, meaning taxpayers gradually pay more tax without official rate increases. What is happening with tax on savings and property income?From April 2027, tax rates on savings and property income will increase by two percentage points across all tax bands. This change will affect investors, landlords and individuals with large savings portfolios. When does Making Tax Digital start for the self-employed?Making Tax Digital for Income Tax will apply from April 2026 for self-employed individuals and landlords earning more than £50,000 per year. They will need to maintain digital records and submit quarterly updates to HMRC using approved software. How can business owners reduce tax following the Spring Statement?Business owners may benefit from proactive tax planning strategies such as:
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