HMRC Issues 30-Day Warning for Making Tax Digital Changes
HM Revenue & Customs (HMRC) has issued a formal 30-day warning to certain self-employed individuals and landlords, confirming that new digital reporting rules under the Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) initiative will apply from 6 April 2026.
What is the Making Tax Digital (MTD) Rule?
Making Tax Digital is a UK government initiative designed to modernise the tax system by requiring businesses and individuals to keep digital records and submit tax updates to HMRC using compatible software. The rules for Income Tax Self Assessment (ITSA) are being phased in, starting with specific groups.
What Has Changed or Been Confirmed?
HMRC has confirmed the mandatory start date for the next phase of MTD for ITSA. From 6 April 2026, self-employed individuals and landlords with a total annual business or property income above £50,000 will be required to follow the MTD rules. This means moving from an annual Self Assessment tax return to quarterly digital submissions and using MTD-compatible software to keep records.
Who Must Pay Attention to This?
This change directly affects UK taxpayers who are:
- Sole traders with business income over £50,000 per year.
- Landlords with property rental income over £50,000 per year.
- Those who fall into both categories with combined income over the threshold.
It is important to note that the £50,000 threshold refers to gross income (turnover) from these sources, not profit. Those with income between £30,000 and £50,000 will be required to join MTD for ITSA from April 2027.
When Does It Apply?
The new rules become mandatory for the affected groups from the start of the 2026/27 tax year on 6 April 2026. This means the first quarterly update period for these taxpayers will cover 6 April to 5 July 2026, with a submission deadline of 5 August 2026.
Why Does This Matter Now?
With the deadline now 30 days away, affected individuals must take immediate steps to comply. This is not simply a change in how you submit a form; it requires a shift to a fully digital record-keeping process. Failure to comply with the MTD rules can result in penalties from HMRC.
What This Means in Practical Terms
For those affected, the practical implications are significant. You will need to:
- Choose MTD-Compatible Software: You must sign up for and use software that can connect to HMRC’s systems via its Application Programming Interface (API). A list of recognised software providers is available on the GOV.UK website.
- Keep Digital Records: You must keep digital records of all business income and expenses from the start date. This replaces traditional paper-based bookkeeping.
- Submit Quarterly Updates: Instead of one annual tax return, you will need to send a summary of your income and expenses to HMRC every three months through your software.
- Submit a Final Declaration: At the end of the tax year, you will make a final declaration through your software to confirm all information, which replaces the annual Self Assessment return.
The goal of the policy is to reduce errors, provide a more real-time view of tax liabilities, and streamline the administration process for both taxpayers and HMRC.
Key Steps to Take Before the Deadline
If you believe you are affected, you should act now. Key steps include:
- Reviewing your income for the 2025/26 tax year to confirm you meet the £50,000 threshold.
- Researching and selecting suitable MTD-compatible software. Many providers offer free trials.
- Familiarising yourself with the digital record-keeping requirements.
- Considering speaking to an accountant or tax adviser if you need help with the transition.
HMRC has stated that it will take a supportive approach to those who are trying to comply, but penalties can apply for persistent non-compliance. The 30-day warning serves as a final prompt to begin preparations for this substantial change to the UK tax reporting system.
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Source:
https://www.cambridge-news.co.uk/news/cost-of-living/hmrc-issues-30-day-warning-33584758
