HMRC is Changing How You Report Tax From April 2026 — Does It Affect You?

From April 2026, HMRC is introducing one of the biggest changes to the UK tax system in a generation. If you are self-employed or a landlord, the way you report your income to HMRC is changing — and the deadline is closer than most people realise.

The change is called Making Tax Digital for Income Tax (MTD for IT). Instead of filing one annual tax return, affected taxpayers will need to submit updates to HMRC four times a year, using HMRC-approved software. The traditional Self Assessment return is being replaced.

Who does this affect?

MTD for Income Tax applies to sole traders and landlords — not to people who only receive a salary through PAYE. What matters is your gross qualifying income from self-employment and property combined, before expenses.

The rollout is being phased in based on income level:

April 2026 — qualifying income over £50,000

April 2027 — qualifying income over £30,000

April 2028 — qualifying income over £20,000

What does it mean in practice?

Instead of pulling everything together once a year, you will need to keep digital records of your income and expenses throughout the year and submit a summary to HMRC every three months. At the end of the tax year, you submit a Final Declaration — the MTD equivalent of your Self Assessment return.

This means paper records and end-of-year catch-up bookkeeping will no longer be acceptable for those in scope. You will need to be using HMRC-recognised software — such as Xero, QuickBooks, or FreeAgent — from the date you are mandated.

What happens if you are not ready?

HMRC is introducing a points-based penalty system for missed quarterly submissions. Miss enough deadlines and financial penalties follow automatically. The system is designed to be stricter than the current one-strike annual filing penalties.

The good news is that for 2026/27 — the first year of mandation — HMRC has confirmed there will be no penalties for missed quarterly update deadlines while businesses adjust. Annual obligations such as the Final Declaration still attract penalties from day one.

Find out where you stand — free 3-minute check.

We have built a free MTD Readiness Checker that tells you in three minutes whether you are affected, when your deadline is, and how prepared your records and software currently are. You will get a readiness score out of 100 and a personalised list of priority actions.

It is free, takes three minutes, and you can use it right now on our website. If your results show gaps, book a free 20-minute call with one of our directors and we will walk you through exactly what you need to do before your deadline. https://www.bartonaccountancy.co.uk/making-tax-digital

Barton Accountancy Limited — ICAEW Chartered Accountants serving businesses across Ashby-de-la-Zouch, Swadlincote, and the East Midlands.