Starting in 2026, millions of self-employed individuals and landlords must adopt HMRC’s new Making Tax Digital (MTD) system for income tax. This shift is designed to streamline tax reporting, but businesses need to start preparing now. With digital record-keeping and quarterly updates, tax management will undergo a significant transformation.
From April 6, 2026, sole traders and landlords in the UK earning over £50,000 will be required to implement Making Tax Digital (MTD) for Income Tax. This change will drastically alter how individuals handle their tax matters, signaling a major step toward a digital and more efficient tax system.
MTD for Income Tax is designed to simplify tax reporting, reduce errors, and improve overall efficiency. HMRC has emphasized that this is part of a broader initiative to modernize the tax system, benefiting both the tax authority and the wider economy.
A Digital Transformation for Self-Employed Individuals
Sole traders and landlords will soon need to maintain digital records and submit quarterly income reports to HM Revenue and Customs (HMRC). This requirement will begin in 2026 for individuals with taxable income over £50,000, and will gradually extend to those with lower earnings by 2027 and 2028.
HMRC views the shift to digital tax reporting as a crucial element of the government’s broader strategy to modernize the tax system. James Murray MP, Exchequer Secretary to the Treasury, emphasized that MTD is essential for the UK’s national renewal, helping businesses manage their tax duties more effectively.
“By modernizing how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share,” Murray said.
The transition to MTD will require eligible individuals to use compatible software capable of handling digital records and quarterly submissions. HMRC believes this change will help self-employed people and landlords stay organized with their tax matters and ensure they pay the correct amount of tax.
For businesses, this shift means fewer manual processes, fewer errors in record-keeping, and more transparent and accurate tax filings.
An Incremental Rollout for Widespread Adoption
Although the full mandate begins in 2026, HMRC is urging businesses to start preparing now. Over the coming years, more individuals will join the MTD system, with those earning above £30,000 expected to be included by April 2027, and the threshold expected to drop further to £20,000 by 2028.
This gradual rollout reflects HMRC’s goal to ensure that businesses can adjust to the new system with minimal disruption.
The government has already implemented MTD for VAT, and its success in helping over two million businesses streamline tax filings sets a positive precedent for the income tax rollout.
According to a 2021 independent report, 69% of businesses subject to MTD for VAT reported benefits, such as reduced administrative burden and fewer errors in tax filings.
With less than a year until the new rules take effect, HMRC is urging affected individuals to sign up for a testing program. This will help them familiarize themselves with the new system and receive guidance from HMRC’s support team before the mandatory transition begins.
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Deepak Grover is a dedicated content writer at OTE News, specializing in government affairs, public policy, and current events. With a keen eye for detail and a passion for factual reporting, he ensures readers receive accurate and insightful news. Deepak holds a degree in Political Science and has experience in research-driven journalism.
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