HM Revenue & Customs (HMRC) has begun sending mandation letters to thousands of UK households, warning recipients not to ignore the correspondence. The letters specifically target self-employed individuals and property owners whose income exceeded £50,000 in the 2024 to 2025 tax year, informing them of important changes to income reporting requirements coming into effect next year.
From 6 April 2026, Making Tax Digital (MTD) for Income Tax will become compulsory for these taxpayers. This means that sole traders and landlords in the specified income bracket will no longer be able to use HMRC’s current online system or submit paper tax returns. Instead, they must use HMRC-compatible software to keep digital records and file quarterly updates rather than a single annual return.
Robert King from Nannywage Ltd commented, “If you receive a mandation letter, it’s critical to act promptly. HMRC does not automatically register taxpayers for Making Tax Digital—you need to select suitable software and sign up before the April 2026 deadline to avoid falling behind.”
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Mr King emphasized that taxpayers are responsible for determining whether their income meets the £50,000 threshold and for registering for MTD if required. He also noted that for the 2025 to 2026 tax year, taxpayers subject to MTD will still need to file a traditional Self Assessment return by 31 January 2027. This will create a transitional overlap where both old and new systems operate simultaneously.
For self-employed childcare providers and landlords, this period may be particularly challenging. Mr King warned that under the new late submission rules, each missed quarterly update or tax return deadline will earn a penalty point. Accumulating four points results in financial penalties, underscoring the importance of timely compliance.