- More than 860,000 people must join Making Tax Digital from April 6.
- Those earning above £50,000 from self-employment or property are first in scope.
- Income thresholds will fall to £30,000 and then £20,000 by 2028.
More than 860,000 people will be required to file regular digital updates with HM Revenue & Customs from April 6 as the government presses ahead with its Making Tax Digital programme.
The Making Tax Digital system, often shortened to MTD, is designed to move the UK tax system fully online. From April 6, sole traders and landlords earning more than £50,000 from self-employment or property will have to keep digital records and submit quarterly updates to HMRC using approved software.
Supporters argue the changes could make tax reporting more efficient once systems are in place. Critics, however, say it risks adding “yet another administrative weight added to an already heavy load,” as quoted in a news report.
New rhythm of reporting
Under Making Tax Digital, those caught by the rules will need to send at least four quarterly updates each year outlining income and expenses, followed by an end-of-year final submission.
For someone who is both self-employed and a landlord, that requirement could effectively double. Experts have warned that in some cases individuals may end up filing more than 10 financial updates annually, particularly if VAT returns are also involved.
Free software options are available, and the system is designed to generate summaries automatically once income and costs are entered. A points-based penalty system will apply for late submissions. Taxpayers receive a point for each missed deadline, with a £200 fine only triggered after four points are reached. That means occasional mistakes should not immediately lead to a penalty.
Research from Sage suggests that 23 per cent of UK business owners already spend more than six hours completing their tax return. Whether quarterly reporting reduces or increases that burden remains a matter of debate.
Thresholds set to fall
The April 6 rollout is only the beginning. From April 2027, those earning more than £30,000 — an estimated 970,000 people — will also be required to use Making Tax Digital. By 2028, the threshold drops again to £20,000, potentially bringing millions more into the system.
For those joining from April 6, the timetable is tight. Digital record-keeping must begin immediately. The first quarterly update will be due by August 7, followed by another in November. A traditional self-assessment tax return will still be required by January 31, 2027, before further quarterly submissions continue into the next tax year.
The government has described Making Tax Digital as a long-term reform to modernise tax administration. But for many sole traders and landlords, the immediate question is more practical: how much extra time, and potentially cost, will quarterly compliance add?
As thresholds widen and more taxpayers come into scope, that debate is unlikely to fade.
