Making Tax Digital for Income Tax: What Rugby and Warwickshire Landlords and Sole Traders Need to Know

The government's flagship tax digitalisation programme is expanding, and from April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will apply to many landlords and sole traders across Rugby and Warwickshire.

At Redwood Accountants, we're already helping local clients in Rugby prepare for these changes to avoid last-minute surprises. Here’s what you need to know, and how to stay compliant—without the stress.

What Is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) is HMRC's plan to modernise the tax system by requiring digital record-keeping and more frequent reporting. MTD for VAT is already in place, and the next phase targets Income Tax Self Assessment.

If you're a sole trader or property landlord with gross income over £50,000, you’ll be required to:

• Keep digital records of income and expenses
• Submit quarterly updates to HMRC using MTD-compatible software
• File a final end-of-year submission (similar to your current tax return)

From April 2027, the threshold drops to £30,000, widening the scope even further.

Who Does MTD for Income Tax Affect?

You’ll be caught by MTD for ITSA if:

✅ You're a sole trader with gross income over £50,000
✅ You're a landlord with property income over £50,000
✅ Or you’re both (the income threshold applies to combined income)

Note: Partnerships and limited companies are not yet required to follow MTD for Income Tax, though future changes are expected.

What Counts as "Digital Records"?

You’ll need to keep all income and expense records digitally, either via:

• MTD-compliant accounting software (like Xero, QuickBooks, FreeAgent)
• A spreadsheet linked with bridging software to submit to HMRC

Gone are the days of handwritten ledgers or Excel-only bookkeeping.

Key Dates to Remember

• Now – Voluntary sign-up is open for early adopters
• April 2026 – MTD for ITSA becomes mandatory for those earning over £50,000
• April 2027 – Expanded to those earning over £30,000

What Does This Mean for You?

For many clients in Rugby, Leamington Spa, and across Warwickshire, this shift represents more admin and complexity—especially if you’ve previously filed just once a year. But with the right setup, it can actually improve financial visibility and cash flow management.

Top Tip: Get ahead of the curve by switching to MTD-ready software now. You’ll have time to adjust and avoid any last-minute headaches.

How Redwood Accountants Can Help

✅ Review your income and structure to check if and when MTD applies
✅ Recommend and set up the right software for your needs
✅ Train you or your team on how to keep digital records
✅ Handle quarterly submissions on your behalf
✅ Ensure full compliance while keeping things simple

We work with landlords, tradespeople, consultants, and sole traders across Rugby and Warwickshire—making digital tax work for them, not against them.

Final Thoughts

MTD for Income Tax is coming, and while it may seem daunting, it’s manageable with the right systems in place. If you’d like a no-obligation chat about what the changes mean for you, get in touch with Redwood Accountants today.

📍 Supporting local businesses and landlords in Rugby and Warwickshire
📞 Contact us now to get MTD-ready with confidence

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Disclaimer: This article is for general guidance only. Please speak to an accountant to understand how MTD affects your specific situation.