If you have not yet checked whether you need to use Making Tax Digital (MTD) for Income Tax, you should do so urgently. HMRC has issued a timely reminder that for many self-employed and landlords the way to report tax to HMRC will change significantly from 6 April 2026.

MTD for Income Tax is a significant move away from the traditional annual self-assessment process towards a more digital and frequent approach, requiring taxpayers to manage records and submit updates through recognised software. The new system is being gradually rolled out over the coming years.

More than 860,000 sole traders and landlords earning over £50,000 from self-employment or property need to start using digital reporting from April 2026. MTD for Income Tax requires users to keep digital records and send quarterly updates of income and expenses. These updates are not additional tax returns and are created by recognised and approved software providers. A full tax return will still be required by the following 31 January after the tax year, i.e., the first MTD tax return, covering the 2026-27 tax year, will be due by 31 January 2028.

HMRC’s Director of Making Tax Digital, said:

‘With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available, and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.

This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.’

Taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates for the first 12 months, giving time to adjust. There are also exemptions available for those who genuinely cannot use digital tools.

We would be happy to help if you need assistance getting started with MTD for Income Tax.

There are several reasons why you might need to file a self-assessment tax return. This could apply if you are self-employed, a company director, have an annual income over £150,000, or receive income from savings, investments or property.

You must file a self-assessment tax return if any of the following apply to you during the tax year:

• You were self-employed as a sole trader and earned more than £1,000 (before expenses).
• You were a partner in a business partnership.
• Your total taxable income exceeded £150,000 in the 2025–26 tax year. However, even if your income is below £150,000, other factors (such as rental income or capital gains) may still mean you need to file a self-assessment return.
• You had to pay Capital Gains Tax on the sale or disposal of assets.
• You were liable for the High Income Child Benefit Charge.
• You had other sources of untaxed income, such as:
  o Rental income from property
  o Tips or commission
  o Savings and investment income (including dividends)
  o Foreign income

If you are filing a self-assessment return for the first time, you must notify HMRC by 5 October following the end of the tax year. For the 2025–26 tax year (ending 5 April 2026), this means the registration deadline is 5 October 2026.

HMRC provides a helpful online tool to check whether you need to submit a self-assessment return: www.gov.uk/check-if-you-need-tax-return.

HMRC has confirmed that more than 11.48 million people submitted their 2024-25 self-assessment tax returns by the 31 January deadline. This included 475,722 taxpayers who left their filing until the final day and almost 27,456 that filed in the last hour (between 23:00 and 23:59) before the deadline!

There are an estimated 1 million taxpayers that missed the deadline. Are you among those that missed the 31 January 2026 filing deadline for your 2024-25 self-assessment returns?

If you have missed the filing deadline then you will usually be charged a £100 fixed penalty if your return is up to 3 months late, regardless of whether you owed tax or not. If you do not file and pay before 1 May 2026 then you will face further penalties unless you have made an arrangement to pay with HMRC.

If you are unable to pay your tax bill, there is an option to set up an online time to pay payment plan to spread the cost of tax due on 31 January 2026 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

If you owe self-assessment tax payments of over £30,000 or need longer than 12 months to pay in full, you can still apply to set up a time to pay arrangement with HMRC, but this cannot be done using the online service.

If you are self-employed, it is important to understand which car and travel costs can be claimed.

You can claim allowable business expenses for car, van, or travel costs, which reduce your taxable profit. Typical allowable costs include:

• Vehicle insurance
• Repairs and servicing
• Fuel
• Parking
• Hire charges
• Vehicle tax and licence fees
• Breakdown cover
• Train, bus, tram, air, and taxi fares
• Hotel rooms
• Meals on overnight business trips

You cannot claim for:

• Non-business driving or travel costs
• Fines or penalty charges
• Personal travel, including commuting between home and a regular workplace, is generally not allowable.

For vehicle costs, you may choose between claiming actual costs or using HMRC’s simplified expenses which is a flat-rate allowance for mileage.

If you buy a vehicle for your business, how you claim the cost depends on your accounting method. Under traditional accounting, you can claim capital allowances on the purchase cost. If you use cash basis accounting, you can also claim capital allowances as long as you are not using simplified expenses. For all other types of vehicles or associated costs, you can claim them as allowable business expenses.

If you have not yet checked if and when you need to use Making Tax Digital (MTD) for Income Tax, you should do so as a matter of urgency. This is because from April 2026 the way many individuals report their tax to HMRC will change significantly. MTD for Income Tax represents a move away from the traditional annual self-assessment process towards a more frequent, digital approach, with taxpayers required to manage their affairs through an online tax account using compatible software.

From 6 April 2026, MTD for Income Tax will apply to self-employed individuals and landlords with qualifying income of more than £50,000 a year. A year later, from April 2027, this will extend to those with qualifying income between £30,000 and £50,000. Qualifying income is broadly the total income received from self-employment and property in a tax year, including income from multiple trades or rental properties. Other sources of income, such as employment income taxed under PAYE, dividends, pensions or partnership income, are excluded from this calculation.

Those within the scope of MTD for Income Tax will be required to keep digital records of their income and expenses and submit quarterly updates to HMRC. These updates provide summaries of income and costs and are intended to give HMRC a clearer picture of taxable income throughout the year. A final declaration will still be required after the end of the tax year, with any tax due payable by the following 31 January. A new points-based penalty system will also apply for late submissions and payments.

If you are unsure whether or when MTD for Income Tax will apply to you, or you would like help preparing for the changes, we would be happy to help.