HM Revenue & Customs (HMRC) has announced a phased rollout of its Making Tax Digital (MTD) for Income Tax initiative, set to affect self-employed individuals and landlords earning above certain thresholds. Starting April 2026, those with a turnover exceeding £50,000 will be required to use MTD. This threshold will reduce to £30,000 in April 2027, and further to £20,000 in April 2028.
MTD is a modern digital system designed to streamline tax reporting by requiring taxpayers to use compatible software to maintain digital records of income and expenses. These records must be updated quarterly and submitted electronically, replacing traditional paper-based filing.
Taxpayers, or their agents, will need to adopt software that integrates with MTD to record, adjust, and submit their financial information. The deadline for submitting the annual tax return and paying any owed tax remains 31 January following the tax year.
READ MORE: Spain Issues Urgent Measles Warning for UK Tourists Amid Rising Cases
READ MORE: I Ruined a Power Couple’s Holiday After Witnessing Their Rude Sun Lounger Behavior
HMRC acknowledges that some taxpayers may be exempt from MTD if they are digitally excluded or meet other specific criteria. Those exempt still need to file Self Assessment tax returns as usual.
To facilitate the transition, HMRC recommends finding suitable software capable of linking with existing records, such as spreadsheets, to create digital files. The HMRC Software Finder tool is available to assist taxpayers in identifying compatible products.
Overall, these changes signal a significant shift toward digital tax management for many UK taxpayers, emphasizing the importance of preparedness and the right tools for compliance.