Time for self‑employed workers and landlords is running out to prepare for a new tax reporting system, HM Revenue & Customs (HMRC) has said. The first phase of the mandatory Making Tax Digital (MTD) initiative will come into force on April 6. The overhaul is one of the largest changes to the UK tax system in decades and will affect anyone whose combined gross income from self‑employment and UK property exceeds £50,000.
From April, these taxpayers will no longer be able to rely solely on traditional Self Assessment. Instead, they must keep digital records and send quarterly updates to HMRC using recognised software, which you can find here. Taxpayers will be required to send four digital updates a year, showing their income and expenses. These updates are not extra tax bills but summaries that give HMRC a near real‑time view of business activity throughout the tax year.
The requirement to move to digital reporting represents a significant shift for those accustomed to reporting once a year. While the annual tax payment deadlines remain unchanged, the way information is reported to HMRC will be very different.
You must comply with MTD from April 6, 2026, if, based on your latest self‑assessment figures:
- You are a sole trader or landlord, and
- If your turnover is above £50,000 in the tax year ending April 5, 2025.
It’s not automatic – taxpayers must sign up themselves and ensure they have suitable digital software in place before the deadline.
Thousands of taxpayers still have not put the right record‑keeping or software systems in place, and there is a risk of penalties for non‑compliance.
Even if your business doesn’t currently operate digitally, compatible accounting tools can make the transition smoother. These range from full bookkeeping packages to bridging software that links existing spreadsheets to HMRC’s systems.
The initial threshold of £50,000 in qualifying income is just the first phase of the rollout. In future years, the income threshold will reduce to £30,000 from April 2027 and £20,000 from April 2028, bringing more taxpayers into the MTD system.