HM Revenue and Customs (HMRC) has updated its guidance for individuals affected by Making Tax Digital for Income Tax, urging self-employed workers and landlords to check whether they need compatible software to comply with the new digital tax rules. The system, which began rolling out in April 2026, requires digital record-keeping and quarterly updates instead of relying solely on the traditional annual Self Assessment tax return.
Who Is Affected by Making Tax Digital?
The rules currently apply to self-employed workers, sole traders, and landlords with qualifying income over £50,000. This includes freelancers, delivery drivers, tradespeople, consultants, online sellers, and landlords with rental income. The £50,000 threshold is based on gross income, not profit.
HMRC has confirmed that the scheme will expand further: people earning more than £30,000 are expected to join from April 2027, and those earning more than £20,000 at a later stage.
What the New Rules Require
Under the new system, affected taxpayers must keep digital records, use compatible software, send quarterly income and expense updates to HMRC, and submit a final declaration each tax year. HMRC says software can help people keep track of income and expenses, manage records digitally, submit updates directly to HMRC, and reduce mistakes linked to manual record-keeping.
HMRC is providing a range of free support, including online guidance, webinars, and videos. Those who genuinely cannot use digital tools can apply for an exemption; more details and guidance are available on GOV.UK.
Choosing the Right Software
HMRC has updated guidance explaining how people can choose software depending on their circumstances, including whether they manage their own taxes, use an accountant or tax agent, need free or paid software, or want software for a single business or multiple income sources. Some products are designed specifically for landlords, while others combine bookkeeping, invoicing, and tax reporting.
HMRC also said some people may be able to use “bridging software,” which links existing spreadsheets to the Making Tax Digital system. The updated software guidance explains that people should check whether products are compatible with Making Tax Digital for Income Tax before signing up.
Step-by-Step Preparation Guide
HMRC has published a step-by-step guide explaining how people can prepare for Making Tax Digital, including checking whether they qualify, choosing compatible software, and signing up for the service. According to HMRC, the changes are designed to modernise the tax system and help reduce errors caused by inaccurate or incomplete record-keeping.
People earning below the current threshold do not yet need to join the scheme unless they choose to do so voluntarily.
