A heads-up for sole traders and landlords: the way many people report their taxes to HMRC is changing.
Under Making Tax Digital (MTD) for Income Tax, the days of keeping a folder of receipts and dealing with everything once a year are gradually coming to an end. Instead, you’ll need to keep digital records and send quarterly updates to HMRC using compatible software.
Who is affected?
• From 6 April 2026: clients with more than £50,000 in combined gross income from self-employment and property.
• From 6 April 2027: those with more than £30,000.
• From 6 April 2028: those with more than £20,000.
A few things worth knowing:
- The thresholds are based on gross income before expenses.
- Self-employment and rental income are combined for the calculation.
- PAYE income and pensions don’t count towards these thresholds.
- Some people who are digitally excluded may be able to claim an exemption.
Importantly, the quarterly updates are not four separate tax returns. You’ll still need to submit an End of Period Statement and a Final Declaration to confirm your tax position.
The real change here is cultural as much as administrative. Tax reporting is moving from being a once-a-year task to something that requires ongoing digital record-keeping throughout the year. For some, this will make finances easier to stay on top of. For others, particularly those less comfortable with technology, it may mean getting systems and support in place sooner rather than later.
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