12th July 2026
The biggest change to Self Assessment in a generation is no longer a future proposal. It is here.
From April 2026, many self-employed people and landlords earning more than £50,000 from self-employment and property income became legally required to join Making Tax Digital (MTD) for Income Tax.
Yet reports suggest that many of those affected have still not signed up or completed their preparations.
The first quarterly update must normally be submitted by 7 August 2026, leaving little time for anyone who has delayed getting ready.
Who Is Affected?
The first phase applies to people whose combined gross income from self-employment and UK property exceeded £50,000 in the relevant tax year.
The threshold is based on gross income before expenses, not profit.
The scheme will then expand:
From April 2027 – income above £30,000.
From April 2028 – income of £20,000 or more.
This means many more sole traders and landlords will eventually be brought into the new system.
What Has Changed?
For decades, many self-employed people kept paper records or spreadsheets throughout the year before completing one Self Assessment tax return each January.
Making Tax Digital changes that routine.
Instead of waiting until the end of the year, taxpayers must:
keep digital business records;
use HMRC-compatible software;
submit quarterly updates of income and expenses;
complete a final year-end declaration.
The first quarterly update for most businesses covers the period from 6 April to 5 July and must be submitted by 7 August 2026. Future updates are due in November, February and May. The annual final declaration remains due by 31 January after the end of the tax year.
Why Are So Many Behind?
Many accountants report that some clients assumed the change had been delayed again after several previous postponements.
Others believed it only applied to VAT-registered businesses.
Some simply did not realise that they needed compatible software before the first reporting period began.
There are also many self-employed people who have managed perfectly well with paper records for years and see little reason to change.
Is There Good News?
Yes.
HMRC has confirmed that there will be a soft landing for the first year.
Although quarterly updates still need to be submitted, late submission penalties will not apply to missed quarterly update deadlines during the 2026–27 tax year. However, businesses are still expected to keep digital records and submit the required updates before filing their annual tax return.
That should not be seen as a reason to ignore the new rules.
It is intended to give taxpayers time to adapt while the new system becomes established.
Why Is HMRC Doing This?
HMRC believes digital record keeping will:
reduce mistakes;
improve the accuracy of tax returns;
give taxpayers a better picture of their tax position throughout the year;
reduce the number of errors that occur when records are written up months after transactions took place.
Supporters argue that many businesses already use accounting software and will benefit from more up-to-date financial information.
Critics respond that it increases administrative work and software costs for many small businesses.
What Should People Do Now?
If you think you may be affected, now is the time to check.
Leaving everything until the first week of August is unlikely to make the process any easier.
Businesses should confirm whether they fall within the income threshold, ensure they are registered if required, choose compatible software if they have not already done so and begin keeping digital records.
Those using accountants should contact them as soon as possible to make sure they understand who will be responsible for each quarterly submission.
The Bigger Picture
Making Tax Digital is one of the most significant reforms to the tax system for many years.
Whether it ultimately reduces errors or simply increases administration remains a matter of debate.
What is beyond doubt is that the days of putting business records in a drawer and sorting them out every January are gradually coming to an end.
For many self-employed people, the digital tax system has already arrived—and the first important deadline is only days away.
Find out more at
https://www.gov.uk/government/collections/making-tax-digital-for-income-tax