A major change is coming and for some it begins in a matter of weeks
HMRC has contacted people directly to tell them that they will be “legally required” to follow a new rule, with some having to do so from next month. Contacting taxpayers via email, the authority explained that new Making Tax Digital (MTD) rules begin for people earning more than £50,000 per year from April 2026.
Then, from next year, the new way of reporting income for self-employed people, or those who earn money from property, will gradually encompass more people. From April 2027 anyone earning more than £30,000 will have to comply and then in 2028 it will affect those earning more than £20,000.
HMRC said: “If you receive qualifying income from self-employment and/or property, you’ll be legally required to use Making Tax Digital (MTD) for Income Tax – based on the level of qualifying income – from the following dates.”
When you need to start using Making Tax Digital
It then went on to elaborate that, from April 2026, if your qualifying income is more than £50,000 in the 2024 to 2025 tax year, you will need to use MTD.
From April 2027, if your qualifying income is more than £30,000 in the 2025 to 2026 tax year, you will need to start using MTD.
Finally, from April 2028, if your qualifying income is more than £20,000 in the 2026 to 2027 tax year, MTD will apply, although HMRC said that was subject to the Government’s plans to introduce legislation to lower the qualifying income threshold to this level being passed.
What is Making Tax Digital?
HMRC explained that taxpayers, their agent if they have one, will need to use software that works with Making Tax Digital for Income Tax to create, store and correct digital records of self-employment and property income and expenses, send quarterly updates to HMRC and submit a tax return and pay tax due by January 31 the following year.
In its email, HMRC said that businesses could get ready for MTD by attending a webinar. It will explain the requirements, how to prepare, what the rules are, how to choose software and more. Businesses can register to attend via this link.
For landlords and joint property owners, there is a separate webinar that will explain how MTD will work. There is also a link to register.
Finally, for those who are a sole trader or landlord without an accountant or bookkeeper, there is a webinar that will explain how to prepare. Register via this link.
