HMRC has confirmed a new digital tax rule for individuals earning more than £30,000 a year, as part of the government's Making Tax Digital initiative. The Labour government's tax arm is introducing a new way for self-employed individuals and landlords to file tax returns.
New Thresholds and Timelines
From April 2026, the rules apply to those with turnover above £50,000. From April 2027, the threshold drops to £30,000, and from April 2028, it further reduces to £20,000. HMRC warns that legally, you must use Making Tax Digital for Income Tax if your income from self-employment or property exceeds these limits.
What You Need to Do
You or your agent must use compatible software to create, store, and correct digital records of your income and expenses. You will also send quarterly updates to HMRC and submit your tax return by January 31 each year. HMRC emphasizes that getting the right software is crucial. Use their software finder tool to check if your existing software works with Making Tax Digital.
Exemptions
Some individuals may be exempt, such as those who are digitally excluded. If exempt, you must continue reporting via Self Assessment as normal. HMRC reminds that exemptions are limited, so most affected taxpayers will need to comply.
