The new rules initially apply to sole traders and landlords earning more than £50,000 per year – but this threshold will gradually be reduced.
HMRC is encouraging eligible taxpayers to sign up to a testing programme now via Gov.uk.
What is Making Tax Digital?
Making Tax Digital makes it compulsory for businesses to use a digital system to keep tax records, submit tax data and make payments.
Currently, Making Tax Digital applies only to VAT-registered businesses, but individuals with a gross income from self-employment and/or property of more than £50,000 will need to use Making Tax Digital for income tax from 6 April 2026.
‘Time-saving’
Ministers claim the new system will save people time, as they won’t have to gather information at tax return time – instead, quarterly updates will spread the workload more evenly throughout the year.
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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.
“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.”
The need to keep digital records
From April 2026, individuals with qualifying income above £50,000 will need to keep digital records and submit quarterly summaries of their income and expenses to HMRC using “MTD-compatible software.”
Businesses that aren’t already using this kind of software – which includes platforms such as Sage, QuickBooks or Xero – will need to pay to buy some.
The Government claims these digital requirements will help businesses save time through more efficient record-keeping, reduce errors in tax calculations, and provide a clearer picture of their tax obligations throughout the year.
Qualifying income includes 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 Making Tax Digital from April 2027. The threshold will then decrease to £20,000 from April 2028.
Making Tax Digital was first introduced for VAT-registered businesses in April 2019, with all qualifying businesses required to join from April 2022.
