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Hundreds of thousands of self-employed workers and landlords will face a major change in how they file their taxes from April 2026, as the Government moves to phase out annual returns in favour of quarterly digital updates.
The new rules – part of HMRC’s Making Tax Digital (MTD) programme – will first apply to those earning over £50,000 from self-employment or property, with the first submission deadline set for August 7, 2026. The overhaul is designed to modernise the tax system, requiring affected taxpayers to keep digital records and report income and expenses every three months using HMRC-compatible software. Around 780,000 people are expected to be part of this first wave, with the income threshold calculated on total gross income, not profit.
A survey by Accountex found that four in five accountants see MTD as the biggest challenge of the year ahead, while one in three admit they feel unprepared for the switch.
Robert Jones, accountant and owner of Swift Tax Refunds, said: “From April 2026, self-employed individuals and landlords earning over £50,000 will need to start submitting quarterly updates under Making Tax Digital. The first deadline covers income and expenses from April 6 to July 5 and falls on August 7. Missing it could trigger financial consequences.”
Late submissions will attract penalties, starting with a £100 fine. After three months, £10 daily charges can apply, up to £900.
Further fines of £300 or 5% of the tax owed may be added after six and twelve months, and separate penalties apply for late payment of any tax due. Interest is also charged from the day payment is late.
The move from a single January tax return to reporting every few months will require changes to how many people manage their accounts. Those with both property and self-employment income will need to keep separate records and file two sets of quarterly reports.
Mr Jones warned: “Logging your income and expenses as you go instead of saving it all for later could help you avoid hundreds of pounds in fines once the rules kick in. The old last‑minute January rush won’t work anymore.”
The scheme will expand in future years. In April 2027, the threshold will drop to £30,000, bringing nearly another million taxpayers into the system. The income threshold will then drop to £20,000 in 2028.
Craig Ogilvie, director of Making Tax Digital at HMRC, said: “With April 2026 on the horizon, we are issuing letters to customers we believe will be mandated, outlining specific requirements and timelines. We urge those who meet the criteria to join our testing programme now to help shape the final service and make your transition smoother.”
An earlier rollout of MTD for VAT-registered businesses in 2019 saw many firms benefit, with Government research showing almost 70% reported an improvement in record‑keeping and a reduction in errors.
James Murray MP, exchequer secretary to the Treasury, said: “MTD for Income Tax is an essential part of our plan to transform the UK’s tax system into one that supports economic growth. By modernising how people manage their tax, we’re helping businesses work more efficiently while ensuring everyone pays their fair share.”
Tax experts advise those affected to prepare early by choosing compatible software, getting used to digital record‑keeping, and, if possible, joining HMRC’s voluntary test programme to iron out any issues ahead of the change.
People can find more information about how to sign up for the MTD testing programme here.
