The tax system is gradually expanding with some people changing from April 2026
HMRC has clarified who needs to start using a new system(Image: Getty)
HMRC has outlined its rules as numerous taxpayers must begin using a new system. The new digital platform is being rolled out progressively over the next few years.
The issue was put in the spotlight after a customer questioned the tax authority over social media about Making Tax Digital. This is a fresh initiative requiring sole traders and landlords to submit quarterly returns to HMRC regarding their activity.
The taxpayer enquired: “Is the yearly self assessment for CIS workers changing in any way? Do we have to submit any three months?
“If yes is there a specific link where we can get updates?” CIS (Construction Industry Scheme) is a framework where a contractor deducts an amount from a subcontractor’s payment and passes it on to HMRC, as an advance payment of the subcontractor’s tax and National Insurance. HMRC initially replied stating simply: “If you meet the qualifying income threshold you’ll need to start using Making Tax Digital.”
The regulations specify that if you had qualifying income exceeding £50,000 annually in the 2024/2025 tax year, you must begin using Making Tax Digital from April 6, 2026, with the commencement of the new tax year.
This is being extended to more people gradually. From April 2027, anyone with income above £30,000 in 2025/2026 will need to be registered.
The Government is also planning to introduce legislation so that from April 2028, it will apply to anyone earning over £20,000 in 2026/2027. The taxpayer posed a more detailed question about how qualifying income would apply in their particular situation.
They explained that over the previous year, they had predominantly worked on a PAYE basis, only switching to the CIS system from mid-January. They asked: “Surely with the CIS part I haven’t broke the threshold of the £50,000 to qualify for Making Tax Digital.
“However I think overall between PAYE and CIS I may overtake that threshold, will I then qualify Making Tax Digital?” HMRC responded by clarifying the rules.
The authority said: “PAYE income doesn’t count towards your qualifying income”. They also provided further guidance: “If you didn’t do any CIS work in 2024/25, you won’t need to start using Making Tax Digital from this April.
“You need to work out how much CIS income you’ve had from January to 5 April 2026. If the annual equivalent amount is over £30,000, you’ll need to start using MTD from 6 April 2027.” Further details regarding what constitutes qualifying income can be found on the Government website.
