Low awareness of new MTD for Income Tax Self Assessment (ITSA) digital tax rules could leave hundreds of thousands of landlords and self-employed people unprepared in 2026.

What MTD ITSA means for taxpayers

From 6 April 2026, any Sole Traders or Landlords earning more than £50,000 from self-employment or rental income in 2024/25 must submit quarterly reports to HMRC using MTD ITSA-compliant software. These reports will include total income, expenses, and profits.

The changes are part of the government’s long-delayed Making Tax Digital programme, first announced in the 2015 Budget. Initially introduced for VAT, the programme is now expanding to Income Tax Self Assessment.

Eloise Brown, Accountancy Service Manager at Crunch, explains:
“The introduction of MTD for Income Tax Self Assessment marks a fundamental shift in how individuals and landlords manage their tax affairs. While it brings increased compliance requirements, it also creates an opportunity for better financial visibility, improved accuracy, and more timely decision-making.

In its first year, MTD ITSA will apply only to individuals with combined sole trade and rental income over £50,000. However, no late filing penalties will be charged during this initial year, making it a valuable opportunity for those who will be required to comply in later years to test the process and prepare without the risk of penalties.”

How many people will be affected by MTD ITSA?

According to the Chartered Institute of Taxation, around 850,000 people will be affected in 2026-27 by MTD for Income Tax Self Assessment. The numbers will then continue to rise as the MTD ITSA threshold lowers:

• April 2026 - Sole Traders and Landlords earning over £50,000.
• April 2027 - Threshold drops to £30,000.
• April 2028 - Threshold drops to £20,000.

Once Making Tax Digital for Income Tax Self Assessment is fully rolled out, it’s expected to affect at least 3 million taxpayers.

Concerns over HMRC readiness

Although the new tax rules have been confirmed by HMRC, experts are concerned about HMRC’s technical readiness. Many of its digital interfaces, or APIs, are still being developed, and industry insiders warn that testing with real taxpayer data could pose privacy risks and lead to calculation errors.
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How Crunch can help

The new MTD ITSA rules can feel overwhelming, but Crunch is helping Sole Traders and Landlords stay compliant and confident. Through guidance, software support, and practical tools, Crunch ensures users can manage quarterly reporting efficiently and avoid last-minute stress.

Meghan Logue, Product Manager at Crunch, said: 
“Awareness of the new MTD ITSA rules is still worryingly low. At Crunch, we’re doing everything we can to educate our users, free and paid alike, so they’re ready, confident, and in control when Making Tax Digital arrives.”

Your ITSA safety net

If you’d rather not face it all alone, Crunch’s full-service ITSA package gives you access to MTD-compatible software and a dedicated Chartered accountant to guide you every step of the way. Your quarterly reports are done right, your Self Assessment sorted so you never overpay tax, and all your questions get answered. 

Ask about anything from tax reliefs to lower your bill to complex ITSA rules like overlap relief. You stay fully in control of your accounts while having an expert who knows their stuff on hand. With our MTD ITSA full service, it’s not just software; it’s a team behind you making sure everything is sorted. Less stress, less admin and paperwork, and the peace of mind that your tax is spot on. Interested? You can sign up here.

Managing ITSA on your own

If you prefer to handle your taxes yourself, our MTD-compatible software gives you the tools you need to stay on top of your quarterly submissions. Track your income and expenses, perform bank reconciliation, and even take payments with CrunchPay.

Stay fully in control of your accounts without relying on spreadsheets. All the control is yours, while the software does the heavy lifting.

HMRC reassurance 

To ease the transition, HMRC has confirmed it’ll waive penalties for late submissions of quarterly reports during the 2026/27 tax year.

HMRC said:
“We’ve worked extensively with customers, representative bodies and software developers to ensure Making Tax Digital works for small businesses and landlords, helping them prepare for the change. It will ensure that more businesses get their tax right, avoiding the worry, cost and burden of extra work when things go wrong, helping to close the tax gap. It will also give customers a better view of the health of their business.

With penalties waived in the first year, now is the perfect time for Sole Traders and Landlords to get familiar with MTD ITSA. To test the process and make sure they’re ready for the changes ahead, even if they don’t meet the initial threshold requirements. 

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