HM Revenue and Customs (HMRC) has updated its guidance for people affected by Making Tax Digital for Income Tax, explaining how to choose compatible software to manage tax records and submit updates online. The new digital tax system began rolling out in April 2026 for some self-employed workers and landlords earning more than £50,000 annually.
Who Is Affected?
The rules currently apply to self-employed workers, sole traders, and landlords with qualifying gross 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.
Expansion Plans
HMRC has confirmed the scheme will expand: 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 Taxpayers Must Do
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 track income and expenses, manage records digitally, submit updates directly, and reduce mistakes linked to manual record keeping.
Choosing Software
HMRC's updated guidance explains how to choose software based on individual circumstances, including whether taxpayers manage their own taxes, use an accountant or tax agent, need free or paid software, or require 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 notes that bridging software can link existing spreadsheets to the Making Tax Digital system.
Taxpayers should check whether products are compatible with Making Tax Digital for Income Tax before signing up. HMRC has also published a step-by-step guide on preparing for the system, including checking eligibility, choosing software, and signing up.
Support and Exemptions
HMRC offers free support including online guidance, webinars, and videos. Those who genuinely cannot use digital tools can apply for an exemption; more details are available on GOV.UK.
People earning below the current threshold do not yet need to join the scheme unless they choose to do so voluntarily.
