29/08/2026
Making Tax Digital for Income Tax is one of the biggest changes to the UK's self assessment system in a generation. Instead of filing one annual tax return by January 31st, self employed individuals and landlords above the income threshold must now submit quarterly updates to HMRC digitally, followed by a final end of year declaration.
The government's case for the change is straightforward. The current system relies on people remembering and accurately reporting income and expenses from up to twelve months ago. Quarterly reporting keeps records current, reduces errors, and brings the UK's tax system in line with modern digital practices. HMRC estimates the change will reduce the tax gap, the difference between tax owed and tax collected, by billions of pounds over time.
But the criticism from small business owners and landlords has been consistent and pointed. Four submissions a year instead of one means four times the admin, four times the potential for errors, and for those without an accountant, four times the stress. For a sole trader running a small business, quarterly reporting can mean significant additional time taken away from actually running the business.
There are also cost concerns. Compatible software is required to submit quarterly updates, adding an ongoing expense for businesses that previously managed with a simple spreadsheet and an annual accountant visit. HMRC has confirmed no late submission penalties will apply in the first year of the system, but the full penalty regime kicks in from April 2027.
The rollout is deliberate and staged. £50,000 threshold from April 2026. £30,000 from April 2027. £20,000 from April 2028. By the time the £20,000 threshold applies, the majority of self employed people and landlords in the UK will be inside the system.
