HMRC will require sole traders and landlords with income exceeding £50,000 to comply with Making Tax Digital (MTD) for Income Tax starting from April 2026. This marks the most significant change to the Self Assessment system since its introduction in 1997.
Under the new rules, affected taxpayers will need to keep digital records, use MTD-compatible software, and submit quarterly updates of their income and expenses to HMRC. This move aims to streamline tax reporting and reduce the administrative burden traditionally associated with the January 31 deadline.
The introduction of quarterly updates is designed to balance the workload throughout the year, moving towards more real-time tax reporting and helping businesses avoid last-minute filing rushes. Self-employed individuals with qualifying income, which includes gross income from self-employment and property before allowances or expenses, must comply with these new digital requirements.
A phased roll-out will follow, starting with the £50,000 income threshold in 2026. The threshold will drop to £30,000 in April 2027 and to £20,000 in 2028. HMRC is encouraging businesses to engage with its testing programme to familiarise themselves with the changes ahead of the mandatory implementation.
The government hopes the transition will help businesses improve efficiency and reduce errors in their record-keeping, offering clearer insights into their tax obligations. These changes are part of HMRC’s broader plan to modernise the tax system, building on the success of MTD for VAT, which over two million businesses have used.
