Around 51,000 sole traders and landlords in Scotland will need to switch to a new digital tax system from April.
Thousands of self-employed workers and landlords across Scotland are facing the biggest shake-up to the tax system in nearly 30 years. From April 6, anyone earning more than £50,000 from self-employment or property will be required to use new digital reporting rules under HM Revenue and Customs’ (HMRC) Making Tax Digital (MTD) scheme.
The changes mean affected taxpayers must keep digital records of their income and expenses and submit updates to HMRC every three months, rather than completing a single annual Self Assessment return.
New figures show around 39,000 sole traders and 4,000 landlords in Scotland will be impacted, along with a further 8,000 people who fall into both categories. HMRC said the overhaul is the biggest change to the Self Assessment system since it was introduced in 1997.
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However, the move is likely to increase the administrative burden for many, particularly those used to completing their tax return once a year.
Under the new system, taxpayers will need to send four quarterly updates using compatible software, followed by a final end-of-year submission.
The first reporting period will run from April 6 to July 5, with the first deadline falling on August 7.
HMRC is urging those affected to act now by choosing appropriate software and familiarising themselves with the new system ahead of the rollout.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said the changes are designed to spread the workload across the year rather than leaving everything until January.
He said: “The quarterly updates aren’t tax returns – they’re simple summaries your software auto-populates, helping to reduce the pressure of the Self Assessment deadline.”
In a bid to ease the transition, HMRC has confirmed there will be no penalty points issued for late quarterly updates during the first year of the scheme.
However, penalties will still apply for late submission of the final tax return.
Free software options are expected to be available, alongside paid packages offering additional features.
Those who use an accountant or tax agent are being advised to speak to them as soon as possible to prepare for the changes.
It’s important to be aware Making Tax Digital doesn’t apply to everybody all at once and will be phased in.
Making Tax Digital for Income Tax applies to those with incomes:
- Over £50,000 – from April 2026
- Over £30,000 – from April 2027
- Over £20,000 – from April 2028
What you need to do now
- Check if your income from self-employment or property exceeds £50,000
- Choose HMRC-compatible software
- Start keeping digital records of income and expenses
- Be ready to submit quarterly updates from April
- Speak to an accountant if you use one
Full details on Making Tax Digital can be found on GOV.UK.
