From April 2026, self-employed individuals and landlords in the United Kingdom earning over £50,000 annually from self-employment or property will move to a digital system for reporting income tax. Under new government rules, those affected must submit quarterly updates to HM Revenue and Customs (HMRC) using recognised software.
The change aims to streamline the tax process and reduce administrative errors, with HMRC offering various forms of support to help affected taxpayers prepare for the transition.
Overview of Upcoming Digital Tax Changes
Making Tax Digital (MTD) for Income Tax represents a significant shift in how certain taxpayers record and report income tax details.
From 6 April 2026, eligible sole traders and landlords will be required to keep digital records and provide summary updates to HMRC on a quarterly basis. The intention is to simplify the end-of-year tax return process and avoid last-minute administration.
Who Is Affected by the New Rules
The requirement to use MTD for Income Tax applies to self-employed individuals and landlords whose combined qualifying income from these sources exceeds £50,000 per year. The government has stated that additional phases will bring those earning above £30,000 into the system at a later date.
Taxpayers who fall below these income thresholds, or who use other income sources such as employment, are not currently required to participate in this phase of MTD. Those who manage their tax affairs through agents should discuss the upcoming changes with their representatives.
How Making Tax Digital Will Operate
Under the new regime, digital records must be maintained using recognised accounting software. Each quarter, users will submit income and expense summaries to HMRC. These quarterly updates are not additional tax returns but serve as light-touch reporting milestones.
At the end of the tax year, participants will still be required to finalise their tax return by the 31 January deadline, but the data from quarterly updates should pre-populate much of the required information, making the process faster and reducing the risk of misplaced paperwork.
Exemptions and Support Available
HMRC recognises that some individuals may not be able to use digital tools due to disability, age, or difficulty accessing digital services. Those facing such barriers can apply for an exemption, with further guidance available on GOV.UK.
To aid the switch, HMRC is offering free support in the form of online guidance, webinars, videos, and a list of approved software solutions. Free software options exist for simple reporting needs.
“With two months to go until MTD for Income Tax launches, now is the time to act,” said Craig Ogilvie, HMRC’s Director of Making Tax Digital. “A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.”
Reporting Deadlines and Penalties
The transition to MTD will not change the annual tax return deadline for the 2025-2026 tax year, which remains 31 January 2027. The first mandatory MTD tax return, covering the 2026-2027 financial year, will be due by 31 January 2028.
To ease the adjustment, HMRC will offer a 12-month grace period for those newly joining MTD from April 2026, during which late quarterly updates will not incur penalty points.
Thereafter, a points-based penalty system will apply. Late submissions accumulate points, with a £200 fine only issued after four points are reached. This approach aims to prevent immediate penalties for occasional errors.
Final Summary
The introduction of Making Tax Digital for Income Tax in April 2026 marks a major reform in the way self-employed individuals and landlords report their income. With the system designed to promote accuracy and reduce paperwork, those with qualifying income will be expected to maintain digital records and submit quarterly updates.
The government’s phased approach and initial grace period for penalties indicate an intent to support taxpayers through the transition. Affected individuals should engage with HMRC resources or their agents promptly to ensure compliance and a smoother switch to digital tax reporting. For those seeking more updates on tax and personal finance, apps such as Pie can offer timely insights and practical tools.
