Making Tax Digital became mandatory from April 2026 for sole traders and landlords who are earning over a certain threshold
HMRC has issued a two-week warning for 864,000 taxpayers after a new tax system was introduced.
Making Tax Digital is a new way to report income tax digitally. It became mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000.
As part of the new process, taxpayers have to submit quarterly updates for their income and expenses – and the deadline for the first update is August 7.
Your quarterly update has to be sent through HMRC-recognised software. After each update, you will see an estimate of their tax bill – you still then need to send a tax return as normal on January 31.
The deadline to pay any tax owed is also still January 31. 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.
Any points accrued expire after 24 months of compliance. There is currently a 12-month transitional grace period for the first year of Making Tax Digital, meaning no penalty points are issued for late quarterly updates are being issued during this time.
Under the current self-assessment rules, you receive an immediate £100 fine if you submit your self-assessment tax return late. The deadline for self-assessment is January 31.
Making Tax Digital will be rolled out to those earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028.
VAT-registered businesses have been required to use Making Tax Digital for VAT purposes since 2022.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “This is a landmark moment for the tax system. Hundreds of thousands of sole traders and landlords are now keeping digital records and will be sending their first quarterly update in the coming weeks.
“For those already using software, this should be straightforward and take minutes. If you haven’t signed up yet, there is still time – visit GOV.UK and search ‘Making Tax Digital for Income Tax’ to get started.”
