HMRC income tax change from April 2026 – what you need to know

Need to know

Making Tax Digital is essentially a new way for you to manage tax records digitally and submit updates to HMRC

What you need to know about Making Tax Digital ahead of new April 2026 rules

• Making Tax Digital is a new way of reporting income tax to HMRC and it is being rolled out to more people, including some self-employed Brits and landlords, from April 2026.
• Making Tax Digital is essentially a new way for you to manage tax records digitally and submit updates to HMRC.
• Instead of submitting one tax return each year, you will need to send four quarterly updates of income and expenses using compatible software, followed by one final declaration.
• The new deadlines are: August 7 for quarter 1 (April 6 to July 5), November 7 for quarter 2 (July 6 to October 5), February 7 for quarter 3 (October 6 to January 5) and May 7 for quarter 4 (January 6 to April 5). Your final declaration must be sent by January 31.
• Sole traders and landlords with an annual income over £50,000 will be required to conform with Making Tax Digital from April 2026.
• The earnings mark will be lowered to £30,000 from April 2027, from to £20,000 from April 2028. At the moment, those whose self-employed income is under £20,000 are not required to follow Making Tax Digital.
• You will need to use software that is compatible with Making Tax Digital, so it will need to be able to store information about your income, expenses, VAT (if VAT-registered) and tax adjustments. If you have multiple sources of income, it will need to be able to track both of these.
• If you already use accounting software, you should check if it is compliant with Making Tax Digital. There is a list of third-party products that are approved on GOV.UK.
• There are fines for missing deadlines, based on a points system. For every missed submission, you will get one point. A £200 fine is then issued when you reach four points for quarterly submissions, or two points for annual submissions.
• It is important to note that points for late submission accrue separately for VAT and income tax. Any points accrued expire after 24 months of compliance.
• Under the current rules, you receive an immediate £100 fine if you submit your self-assessment tax return late. The deadline for self-assessment was January 31.
• VAT-registered businesses have been required to use Making Tax Digital for VAT purposes since 2022.
• READ THE FULL STORY: HMRC to replace automatic fines for new points system in major tax shake-up

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