Countdown to Chaos? Sole Traders and Landlords Face Digital Tax Revolution in 2026

People Also Read

Cardiff to Surpass Ibiza with Record-Breaking 21°C Temperatures

He Never Thought a Fridge Freezer Delivery Would Land Him in Jail

Viral chicken jockey trend sparks popcorn storm and mass ejection at Welsh cinema

Understanding the Chris Kaba Case

HM Revenue & Customs (HMRC) is set to launch a major reform of income tax reporting for sole traders and landlords starting next April, as part of its Making Tax Digital (MTD) initiative. From April 6, 2026, individuals with income over £50,000 from self-employment or property will be required to keep digital records and submit quarterly updates to HMRC using MTD-compatible software.

This shift aims to modernize tax administration by replacing the traditional annual Self Assessment tax return with more frequent, digital submissions. HMRC estimates that around 780,000 self-employed people and landlords will be affected in the first year, with an additional 970,000 joining the scheme from April 2027 when the income threshold lowers to £30,000.

The government highlights that maintaining digital records throughout the year will save taxpayers significant time previously spent compiling information at tax return deadlines, enabling them to focus more on their businesses. Quarterly reporting will also help spread the tax workload more evenly and bring the system closer to real-time financial management.

Exchequer Secretary to the Treasury James Murray MP emphasized the importance of this reform: “MTD for Income Tax is an essential part of our plan to transform the UK’s tax system into one that supports economic growth. By modernising how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share. This is a crucial step in this government’s decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth.”

Craig Ogilvie, HMRC’s Director of Making Tax Digital, described the reform as “the most significant change to the Self Assessment regime since its introduction in 1997,” adding, “It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax. By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year.”

The phased rollout will continue with the income threshold dropping to £20,000 from April 2028. The reform builds on the success of MTD for VAT, which currently assists over two million businesses in reducing errors and saving time.

In total, HMRC projects that by 2027/28, 8.2 million people over the age of 60 will be newly required to pay income tax, reflecting broader changes in tax policy and administration. Taxpayers and their agents are encouraged to begin preparations now by signing up for HMRC’s voluntary testing programme to ensure a smooth transition to the new digital system