Those with qualifying income will need to keep digital records and send quarterly updates
More than 860,000 sole traders and landlords need to start using digital tax reporting from April (stock image)(Image: Getty)
Thousands of people across the country are being urged to prepare for HM Revenue and Customs’ (HMRC) income tax change that is due to start in a couple of months. It comes as part of HMRC’s latest ‘act now’ alert, reminding those affected that ‘tax is changing in April 2026′.
More than 860,000 sole traders and landlords must start preparing for the new Making Tax Digital (MTD) for Income Tax rules, which begin on April 6, 2026. This initiative is part of the Government’s effort to transform the UK’s tax system and support economic growth.
Sole traders and landlords with self-employment and property income over £50,000 are required to act now to prepare for the change. Starting from April 6, those eligible must use compatible software to maintain digital records and send light-touch quarterly updates of their income and expenses to HMRC. These updates are not full tax returns.
HMRC is offering a range of free support resources, including online guidance and webinars. Exemptions are available for those genuinely unable to use digital tools; further details are available on GOV.UK.
Available software, including free options, is designed to generate a simple summary for HMRC after income and expenses are recorded. While an annual tax return is still required by January 31, the software will contain the information from the quarterly updates, eliminating the need for a last-minute records search.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available, and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.
“This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax. Spreading your tax admin throughout the year means avoiding that last-minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.”
The government is supporting the transition by confirming that customers joining MTD in April 2026 will not face penalty points for late quarterly updates during the first 12 months. The new system introduces a penalty points system for late submissions, with a £200 fine applied only after four points are accrued, meaning minor errors won’t lead to immediate fines.
Thousands of sole traders and landlords have already voluntarily signed up for MTD for Income Tax and successfully submitted over 12,000 quarterly updates through a testing program. A statement on Gov.uk reads: “HMRC is urging those in scope of MTD for Income Tax to act now: read the guidance, choose software and sign up on GOV.UK. Those who use a tax agent should speak to them about preparing.”
For those joining in April 2026:
- The tax return for the 2025 to 2026 tax year (pre-MTD) is still due by January 31, 2027.
- The first MTD tax return, covering the 2026 to 2027 tax year, will be due by January 31, 2028.
HMRC advises those in scope to prepare immediately by reading the guidance, selecting their software, and signing up on GOV.UK. Alternatively, they should discuss preparation with their tax agent.
What will the phases look like?
MTD for Income Tax will be introduced in phases for sole traders and landlords:
Date joining MTD
Qualifying income
Q1 update due
Q2 update due
Q3 update due
Q4 update due
Self Assessment return due
An income tax is a tax you pay on the money you earn from different sources, such as your job, self-employment income, pensions, and investments. Most governments let you keep a certain amount of money tax-free before they take a percentage from what you earn after that. They use systems like Pay As You Earn (PAYE) or Self Assessment to raise funds for public services such as healthcare, education, and infrastructure.
