The HMRC has alerted Brits to tax changes coming in April
The change follows HMRC’s push for a comprehensive digital modernisation of Self Assessment(Image: fizkes via Getty Images)
Millions of self-employed people and landlords are preparing for a massive transformation of Britain’s tax system from April 6.
The change follows HMRC’s push for a comprehensive digital modernisation of Self Assessment that accountants caution could pile on additional administration, increased expenses – and further penalties unless preparations begin immediately. Through the Government’s Making Tax Digital for Income Tax (MTD) programme – the most significant Self Assessment reform in decades – sole traders, freelancers and landlords with combined earnings exceeding £50,000 will be shifted from the traditional paper-based system into quarterly digital reporting.
Put simply, the alterations mean the annual tax return alone will no longer suffice. Instead, affected groups must maintain records using approved software throughout the year.
Every three months, they’ll be required to submit a digital update to HMRC detailing their income and expenditure. This translates to four mandatory submissions – followed by a final annual declaration – each year.
Accountants raise concerns
Professionals within the sector are already flagging potential cost increases. Recent research indicated that over 200,000 landlords and sole traders who previously handled their own tax returns may face charges of 5-10% for accountancy services as demand for assistance with the new system escalates.
To make matters worse, whilst HMRC has postponed formal penalties for missed quarterly updates until April 2027, anyone who repeatedly fails to meet deadlines after that point could accumulate penalty points – and a £200 fine once four points are collected.
Small business owners left baffled – and caught off guard
Despite numerous warnings, a considerable number of self-employed Brits are yet to make the switch to digital software – with many still depending on spreadsheets, paper records or last-minute scrambling.
Experts warn the rule change won’t solely affect the wealthy. In 2027 the income threshold drops to £30,000 and then to £20,000 in 2028 – meaning millions more people will be drawn into the system.
HMRC argues that the changes will help taxpayers avoid costly errors and simplify business management by spreading the workload throughout the year. The taxman says the shift to digital records and quarterly updates will “provide clearer real‐time insight into tax affairs” and reduce the likelihood of mistakes.
Taryn Lee Johnston, owner of Lincoln-based The FCM Group, told Newspage: “For many self-employed people, this is another administrative weight on an already heavy load. Many will either pay accountants more or spend extra hours on compliance instead of growing their businesses. The pace and scale of the burden is the real problem.”
Gwion Thomas, founder of LITT, the freelancer accounting app, urged preparation: “Making Tax Digital is a landmark shift, moving millions to digital record-keeping and quarterly reporting. Get ready now – don’t leave it to a last-minute scramble.”
Steven Greenall, mortgage adviser at Protect & Lend, said early planning is crucial: “It will feel onerous at first, but those who prepare and set up the right systems will find the transition much more manageable.”
Colette Mason, AI consultant at Clever Clogs AI, warned about the scope: “Over two million people will be affected by 2028. Even small side-hustles could face eight or more filings a year. The compliance burden risks outweighing any tax recovered.”
Patricia Ogunfeibo, founder at tenant2owner, highlighted penalties: “Miss a deadline and penalty points hit fast. Add late payment interest, and the costs stack up. Without a process in place, even illness or accidents could trigger fines.”
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