A new tax reporting requirement comes into force on 6 April 2026, as HM Revenue & Customs (HMRC) rolls out Making Tax Digital (MTD) for Income Tax. Self-employed workers and landlords with qualifying income above £50,000 must now keep digital records and submit quarterly updates, replacing the traditional annual self-assessment system for this group.
The change applies to individuals registered for self-assessment who earn income from self-employment, property, or both. HMRC defines ‘qualifying income’ as total receipts before expenses are deducted. Those below the £50,000 threshold remain on the current system for now, but the limit is due to fall to £30,000 in April 2027 and £20,000 in 2028.
The introduction of the rules has led to confusion among some taxpayers, particularly around how the £50,000 threshold applies and how it differs from other tax measures. HMRC guidance states that individuals are responsible for checking whether they need to comply, even if they do not receive direct notification.
Who Needs to Use Making Tax Digital
According to HMRC guidance, MTD for Income Tax is mandatory for individuals who are registered for self-assessment as a sole trader or landlord, receive income from self-employment or property, and have qualifying income above the relevant threshold.
Those affected must begin using the system from the start of the 2026/27 tax year. HMRC reviews previous tax returns to assess eligibility and may contact taxpayers to confirm when they need to comply. However, individuals are still expected to check their status independently.
Some exemptions apply. HMRC states that people who are digitally excluded or unable to use online services may not need to adopt MTD, though they must continue to file self-assessment returns.
How the New System Works
Under MTD, affected taxpayers must submit four updates per year summarising income and expenses. These updates are due on 7 August, 7 November, 7 February and 7 May.
The submissions are not final tax calculations but provide a running estimate of tax liability. The system is intended to reduce errors and give taxpayers a clearer, ongoing view of their tax position throughout the year.
Taxpayers must use compatible software to maintain digital records and send updates to HMRC. Those who do not prepare in advance risk delays or penalties if they fail to meet reporting requirements.
Child Benefit Rules Remain Unchanged
Separate changes previously expected for April 2026 have not been introduced. Plans to move the High Income Child Benefit Charge (HICBC) to a household-based system were dropped in the Autumn Budget 2024.
The charge continues to be assessed on an individual basis. A parent earning above £60,000 must repay child benefit, regardless of their partner’s income. The charge is tapered and fully withdrawn once income reaches £80,000.
This distinction has contributed to confusion, as the £50,000 MTD threshold and the £60,000 child benefit threshold apply to different rules.
Additional Tax Changes
Other measures affecting the 2026/27 tax year include higher dividend tax rates. The basic rate has increased to 10.75 per cent, while the higher rate is now 35.75 per cent.
Changes to statutory sick pay rules have also taken effect, with the removal of the Lower Earnings Limit, extending eligibility for some workers while increasing administrative requirements for employers.
As @cmackinlay points out, it’s not just 5 income tax returns that will be required under Making Tax Digital (MTD).
“If you have multiple income streams, an MTD return for each activity will be required. An example would be a sole trader with £20k of annual income and £20k of… pic.twitter.com/XdHn1DDXJT
— Cut My Tax (@CutMyTaxUK) March 8, 2026
Quite remarkable by the HMRC. In October 2025 I noticed there was gap in my NI contributions for 22/23, which I pay myself as I run my own business.
I called the HMRC, waited for ages and eventually got to someone (clearly working from home; bad line, background noise) who said…
— Proper Memes 〓〓 (@Proper_Memes) April 2, 2026
What It Means for Taxpayers
The introduction of MTD marks a shift towards more frequent reporting for self-employed individuals and landlords above the £50,000 threshold. Taxpayers must now maintain records and update HMRC throughout the year.
HMRC has advised affected individuals to ensure they are using compatible software and understand their obligations before deadlines begin.
As the system expands in the coming years, more taxpayers are expected to be brought into the digital reporting framework.
