From April, the changes will apply to sole traders and landlords earning over a certain amount (Image: Getty)
UK residents are being reminded of a significant HM Revenue and Customs (HMRC) change approaching this April. Only two months remain before self-employed workers and property landlords with qualifying income above £50,000 must adhere to Making Tax Digital (MTD) for Income Tax.
The alteration, scheduled for April 6, means these taxpayers will be required to keep digital records and file their income with HMRC. Although two months may appear considerable, financial experts at St. James’s Place are urging prompt preparation ahead of these regulatory changes to avoid potential fines.
Alexandra Loydon, Group Advice Director at St. James’s Place stated: « 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. »
According to the Daily Record, Ms Loydon added: « 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.
Under the new system, taxpayers will be required to keep digital records of income and expenses (Image: Getty)
« 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. »
Much like Self Assessment, failing to meet Making Tax Digital requirements can lead to penalties. A points-based system, similar to that employed for driving licences, means that repeatedly missing submission deadlines could result in a £200 fine.
Late payments also attract charges, starting at 3% for sums overdue between 16 and 30 days, rising to 6% after 30 days, with additional daily interest building up at an annual rate of 10% until the debt is cleared.
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HMRC has acknowledged that individuals genuinely unable to use digital platforms may be eligible for an exemption based on digital exclusion. However, those who believe this might apply to their situation are advised to act swiftly to avoid unnecessary penalties.
HMRC is keen to stress that the changes will not necessitate anyone submitting extra tax returns. HMRC stated: « 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 estimates that roughly 780,000 self-employed individuals and landlords will be required to use MTD for Income Tax from April 2026, with a further 970,000 joining from April 2027.
Those interested can register for the HMRC pilot scheme through GOV.UK.
