The new rules will come into force from April 6
HMRC has issued a call to action as over 860,000 taxpayers are set to face new rules within two months. From April 6, many sole traders and landlords will need to start using digital tax reporting, and experts are urging those affected to be prepared.
Any sole traders and landlords earning more than £50,000 from self-employment and property will be required to use use digital tax reporting from April 6. This will see affected taxpayers no longer filling out their tax return all at once, and instead the admin will be split and spread throughout the year.
From April 6, those affected will need to begin using a HMRC recognised software to keep their digital records, before sending light-touch quarterly updates of their income and expenses. Free software options are available and once income and expenses are recorded, the software generates a simple summary to be sent to HMRC.
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With two months to go until the change comes into force, HMRC is now urging those affected to prepare for Making Tax Digital (MTD) for Income Tax. To support those affected, a range of free resources including online guidance, webinars and videos are also being provided by HMRC.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.
“This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax. Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.”
Those joining MTD in April 2026 will still file their tax return for the 2025 to 2026 tax year in the usual way by 31 January 2027, as this covers the period before MTD begins. The first MTD tax return, covering the 2026 to 2027 tax year, will be due by 31 January 2028.
To support the transition, the government has also announced customers joining MTD for Income Tax in April 2026 won’t receive penalty points for late quarterly updates, for the first 12 months following the change. Under the new system, penalty points will also be given for each late submission, with a £200 penalty only applied once four points are reached, helping to allow for occasional slip-ups.
The new rollout forms part of the Government’s plan to transform the UK’s tax system in a bid to support economic growth. Thousands of sole traders and landlords have also signed up already for MTD for Income Tax, and more than 20,000 quarterly updates successfully submitted through a voluntary testing programme.