HMRC has written directly to taxpayers informing them they will be 'legally required' to comply with new Making Tax Digital (MTD) rules, with some needing to do so from next month. The tax authority outlined that fresh MTD requirements commence for those earning over £50,000 annually from April 2026.
From April 2027, anyone earning above £30,000 must adhere to the rules, and from 2028 it will impact those earning more than £20,000. HMRC stated: 'If you receive qualifying income from self-employment and/or property, you'll be legally required to use Making Tax Digital (MTD) for Income Tax – based on the level of qualifying income – from the following dates.'
The authority clarified that from April 2026, if your qualifying income exceeds £50,000 in the 2024 to 2025 tax year, you must adopt MTD. From April 2027, if your qualifying income surpasses £30,000 in the 2025 to 2026 tax year, you will be required to begin using MTD. Finally, from April 2028, if your qualifying income is above £20,000 in the 2026 to 2027 tax year, MTD will be mandatory, though HMRC noted this remains subject to the Government's plans to introduce legislation lowering the qualifying income threshold to this level being approved.
HMRC outlined that taxpayers, along with their agent if they have one, will need to use software compatible with Making Tax Digital for Income Tax to create, store and amend digital records of self-employment and property income and expenses, send quarterly updates to HMRC and submit a tax return and pay tax due by January 31 the following year.
In its email, HMRC stated that businesses could prepare for MTD by attending a webinar. It will cover the requirements, how to prepare, what the rules are, how to choose software and more. For landlords and joint property owners, there is a separate webinar that will explain how MTD will work. Finally, for those who are a sole trader or landlord without an accountant or bookkeeper, there is a webinar that will explain how to prepare.
