Taxpayers making more than £50,000 per year are urged to check new HMRC rules to see if they are subject to major changes in the way returns are submitted. Britons with combined gross income from sole trades and property exceeding that figure in the 2024/25 tax year will need to sign up to Making Tax Digital (MTD) for income tax before it’s introduced in April this year.
HMRC introduced the Making Tax Digital scheme for VAT-registered businesses in 2022 as part of a transition to an all-digital service. From April 6, 2026, the tax authority will require some higher-earning self-employed people and landlords to file updates on their income and expenses four times a year and to pay for approved software to submit with them.
The Institute of Chartered Accountants in England and Wales (ICAEW) has urged people in this category to sign up or get their agents (tax professionals, accountants) to do so on their behalf, and get ahead of the changes to avoid any nasty surprises.
Mandation letters started being sent to those who filed their Self-Assessment tax return for 2024/25 by the end of August last year, asking them to sign up, the ICAEW says.
Meanwhile, letters for those who filed their 2024/25 returns between September 2025 and January 2026 are set to be sent out in February and March.
However, the ICAEW warns that some taxpayers subject to the new rules will not receive their letters until April, at which point they’ll need to start keeping digital accounting records, unless they already do.
The organisation says any taxpayers may assume that the tax authorities will automatically sign them up to MTD, but this isn’t the case. And eligible people must get it set up even if they don’t receive a letter.
Lindsey Wicks, ICAEW Senior Technical Manager, Tax Policy, said: “MTD for income tax represents the most significant change to income tax reporting for taxpayers and agents for almost three decades.
“It is important that taxpayers understand their responsibilities, beginning with signing up for MTD income tax.
“Once in MTD income tax, they will need to keep digital records and submit quarterly updates and an end of year return to HMRC using compatible software.
“A letter from HMRC indicates that it’s time to get serious about MTD income tax,” she added. “Taxpayers should consider signing up now, and agents should consider how and when they will sign up their clients, so they can get ahead of the curve before the first quarterly updates are due for submission by 7 August.”