From April 6, 2026, HM Revenue and Customs (HMRC) will implement significant tax changes affecting more than 864,000 landlords, sole traders, and self-employed individuals in the UK. These changes target those with annual incomes exceeding £50,000 from self-employment or property rental.
Fraser Campbell, UK Head of ABAS at Azets, warns that this marks a major shift in tax reporting. “Making Tax Digital (MTD) signals the end of the traditional paper income tax return,” Campbell explains. “It introduces digital reporting obligations for hundreds of thousands of taxpayers, requiring them to adopt new compliant software and processes ahead of the upcoming deadline.”
The MTD initiative aims to streamline tax reporting by enabling near real-time digital submission of financial information. This not only ensures compliance but also offers benefits such as enhanced visibility into business performance, improved tax planning, and a more efficient year-end process. Campbell emphasizes the importance of early preparation, stating, “It is crucial to put plans in place now to ensure a smooth transition to the new digital regime.”
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Under the new rules, all landlords and sole traders with qualifying income must use software compatible with Making Tax Digital for Income Tax to report their income and expenses to HMRC. This step marks a significant modernization of the UK’s tax system, moving towards fully digital tax management.