A major tax change will hit the self-employed and landlords with an income of over £50,000 next April. From April 6, 2026, they will be required to use Making Tax Digital (MTD) when declaring their income tax. That means keeping digital records from now and throughout this year.
According to HMRC, around 780,000 sole traders and landlords need to use the MTD system this year, with a further 970,000 joining next year. MTD is designed to bring the tax system closer to real-time reporting, allowing firms to stay across their reporting throughout the tax year and avoid a last-minute scramble.
James Murray MP, Exchequer Secretary to the Treasury, said: "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share.
"This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth."
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax."
He added: "By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year."
Under the new system, qualifying income will include gross income from self-employment and property, before any tax allowances or expenses are deducted. Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease again to £20,000 from April 2028.
According to the Daily Record, the phased introduction of MTD for income tax follows the successful implementation of MTD for VAT.
