Financial experts urge sole traders and landlords to act now
From April, the changes will apply to sole traders and landlords earning over a certain amount(Image: Getty)
Brits are reminded of a major HM Revenue and Customs (HMRC) change coming this April. There are just weeks to go before the new rules come in.
These will mean self-employed people and property owners with eligible earnings exceeding £50,000 must comply with Making Tax Digital (MTD) for Income Tax. The change, set for April 6, means that these taxpayers will be obliged to maintain digital records and submit their earnings to HMRC.
Whilst two months might seem distant, financial professionals are encouraging immediate action in advance of these regulatory adjustments to prevent future penalties. Alexandra Loydon, Group Advice Director at St. James’s Place said: “With the first stage of Making Tax Digital for Income Tax Self-Assessment only two months away, those who will be affected need to start preparing now to avoid a last-minute rush ahead of the new tax year.”
As reported by the Daily Record, Ms Loydon continued: “From April, the changes will apply to sole traders and landlords earning more than £50,000 a year, with HMRC estimating that around 864,000 people across the UK will fall within scope. While the shift may feel daunting, taking steps early can make the transition far smoother and reduce the risk of problems further down the line.
“One important consideration is that HMRC will not provide accounting software, meaning individuals will need to choose a compatible provider themselves, particularly if they don’t already work with an accountant or financial adviser. Under the new system, taxpayers will be required to keep digital records of income and expenses, including VAT and tax adjustments, and submit updates on a quarterly basis, so getting used to digital record-keeping and reporting deadlines now is key.”
Similar to Self Assessment, failure to comply with Making Tax Digital obligations can result in penalties. A points-based framework, comparable to that used for driving licences, means that consistently missing submission dates could incur a £200 penalty.
Delayed payments also carry charges, beginning at three per cent for amounts outstanding between 16 and 30 days, increasing to 6 per cent beyond 30 days. Further daily interest will then accumulate at an annual rate of 10% until the debt is settled.
HMRC has confirmed that individuals genuinely incapable of utilising digital platforms may qualify for an exemption on grounds of digital exclusion. Nevertheless, those who suspect this might be relevant to their circumstances are urged to take action promptly to prevent avoidable fines.
HMRC is eager to emphasise that the reform will not require anyone to submit additional tax returns. HMRC said: “The required quarterly updates are simple summaries that your software generates automatically.
“Think of it as digital bookkeeping that talks to HMRC four times a year, rather than cramming everything into January for your Self Assessment return. If you spot an error, you can fix it in the next update.
“More than 2,000 updates have been successfully submitted in the testing programme and the feedback from those involved has been encouragingly positive.” HMRC anticipates approximately 780,000 self-employed workers and property landlords will need to adopt MTD for Income Tax from April 2026, with an additional 970,000 following suit from April 2027. Registration for the HMRC pilot scheme is available via GOV.UK.
