HM Revenue and Customs is rolling out the biggest reform to self-assessment in decades, requiring freelancers and landlords to submit quarterly updates via commercial software. Known as Making Tax Digital, the system aims to modernise tax reporting but has sparked fears among those affected.
From this April, sole traders and landlords with combined turnover from self-employment and property exceeding £50,000 must comply. The threshold will drop to £30,000 in April 2027 and £20,000 in April 2028, bringing nearly three million people into the regime by 2028. HMRC has warned over 860,000 taxpayers to act now.
Quarterly updates must be based on digital records detailing each transaction's value, date, and expense category. Those affected must use compatible software to submit returns and maintain digital records. However, certain groups are exempt, including those covered by the blind person's allowance until 2029, and foster carers receiving qualifying care relief until 2027.
HMRC is writing to affected taxpayers in February and March, but individuals are legally responsible for compliance regardless of receiving a letter. Exemptions are available for those unable to use digital tools due to age, disability, or lack of internet access.
