HMRC is introducing a new ‘Making Tax Digital’ system from April 6 (Image: Getty)
Self-employed workers and landlords across the UK have been issued a February warning ahead of a major HMRC tax change this year.
From April 6, HM Revenue and Customs (HMRC) will require those earning more than £50,000 from self-employment and property to file a tax return every three months, instead of just once a year. The changes come as part of a new ‘Making Tax Digital’ system that will require people to keep digital records throughout the year and submit quarterly updates to the tax office, along with an annual ‘MTD tax return’.
The new rules will come into effect for those with a total gross income (before expenses) of more than £50,000 per year from April 2026, with lower income bands to be added in subsequent years.
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According to HMRC statistics, 864,000 sole traders and landlords are expected to be in the first wave of taxpayers facing the new rules in two months, rising to almost three million as lower income bands are included by April 2028.
With just two months to go until the changes take effect, the Association of Taxation Technicians (ATT) is urging affected sole traders and landlords to take action now to ensure they are ready in time.
The ATT said February and March are “critical months for preparation” and advised those affected to:
investigate and choose compatible commercial software
speak to their accountant or tax adviser as early as possible
understand quarterly deadlines and record keeping requirements.
The experts warn that leaving these steps until April risks errors, missed submissions and unnecessary stress.
Emma Rawson, ATT Director of Public Policy, said: “Making Tax Digital is one of the biggest changes to the tax system in years, and it’s not something people should be trying to grapple with for the first time in April.
“February is the point at which preparation really matters. The message isn’t to panic, but to act now – check if you’re affected, get the right software in place, and seek advice early if you need it.”
HMRC is providing a range of free support to help people prepare, including online guidance, webinars and videos. Those who genuinely cannot use digital tools can apply for an exemption.
Free software options are available and once income and expenses are recorded, the software generates a simple summary to send to HMRC.
At the end of a tax year, those within MTD for Income Tax will still need to file a tax return by the following January 31, but the software will already hold the information from the quarterly updates, meaning no last-minute hunt for records or receipts.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.
“This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.”