From April 6, 2026, taxpayers earning over £50,000 from self-employment or property income will need to comply with Making Tax Digital (MTD) for Income Tax
Thousands of Brits across the UK have been issued a new tax warning ahead of a major HMRC change next year. The warning comes ahead of the next phase of the tax office’s Making Tax Digital (MTD) rollout next year.
From April 6, 2026, taxpayers earning over £50,000 from self-employment or property income will need to comply with Making Tax Digital (MTD) for Income Tax. This is a new system for recording and reporting income and expenses, and all businesses’ records will need to be kept digitally, and you will need to file quarterly updates on your earnings to the tax office.
The move is expected to affect approximately 780,000 people in its first wave. Those earning between £30,000 and £50,000 – so another 970,000 people – will be affected from April 2027, with a further expansion to those earning £20,000 from 2028.
According to HMRC, the change is designed to improve accuracy, reduce errors, and save time. They believe the digital transition will help taxpayers stay on top of their obligations while offering a clearer picture of their tax position year-round.
Andy Wood, International Tax Advisor at Tax Natives, warned that the scope of the scheme is “much broader” then many expect. He said: “Many people assume these thresholds apply to their net income after tax relief, but that’s not the case. It’s based on total income before deductions.
“This is the biggest change to personal tax reporting since Self Assessment was introduced. While Making Tax Digital aims to streamline the process, it also places a much greater administrative burden on individuals who may not be set up for quarterly reporting.”
“It’s not just about moving tax online – it’s about shifting to real-time reporting. That means landlords and sole traders will need to adjust how they manage their finances throughout the year, not just at tax return time.”
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Andy noted that the system has benefits, particularly for those who already use cloud accounting software. However, smaller landlords and traders could face extra costs to comply with the new laws.
HMRC is currently encouraging early adopters to join the Making Tax Digital testing programme, which the tax office says will give people extra time to familiarise themselves with the new system and access dedicated support.
Andy added: “Signing up early is wise. It allows you to test-drive the system, work out any teething issues, and avoid a last-minute scramble in 2026. Taxpayers who prepare in advance will be in a far better position when the deadline hits.”
Making Tax Digital has already been rolled out for VAT and has reportedly helped over two million businesses reduce errors and increase efficiency. A 2021 report found that 69% of businesses saw at least one benefit, with 67% reporting fewer record-keeping mistakes.
Andry said there is “definitely potential” for long-term savings and greater accuracy. Andy said: “But the key to unlocking those benefits lies in how well taxpayers adapt to the new systems. A proactive approach will be vital.”
“Now is the time to speak with an accountant or tax adviser, get the right software in place, and understand how this affects your personal circumstances. The cost of doing nothing could be high, both financially and in terms of compliance.”
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