HMRC Issues Making Tax Digital Warning to Sole Traders and Landlords

Many times on this website we have covered the topic of Making Tax Digital (MTD) which has been in place since April 2019, with limited companies required to use approved software for bookkeeping and VAT records to then submit quarterly returns via the software to electronically supply HMRC with data/returns without the need for HMRC staff to manually be involved.

For self employed, there was a tansition period in 2022/23 where trade year ends where moved for all to be in line with the tax year end 6^th April to 5^th April.  Since then, HMRC has been working towards MTD for self employed and landlords.

Originally, this was supposed to start for Self Employed and Landlords with annual business or property income (not your profit after expenses, it is just the gross income) in excess of £10,000 pa from April 2023.  This was then postponed until April 2024 and finally postponed again for Self Employed and Landlords as follows: 

• From April 2026, for those with qualifying income over £50,000.
• From April 2027, for those with qualifying income over £30,000.

The new tax year, 2025/26 is nearly upon us, giving many self employed and landlords just one year before MTD starts.

It is time for self employed and landlords and get their ‘ducks in order’ and go digital with their bookeeping.  With this is mind, HMRC this week issued the following warning to self assessment and tax agents such as ourselves:

“Dear customer,

You may have clients who need to change the way they report their income and expenses

Sole traders and landlords who have a total income from self-employment and property of over £50,000, in their 2024 to 2025 Self Assessment tax return, will need to use Making Tax Digital for Income Tax from 6 April 2026 (unless they’re exempt).

If any of your clients need to use Making Tax Digital for Income Tax, you should start preparing for this change now.

How we’re letting customers know about this change

From April 2025, we’ll write to customers whose 2023 to 2024 Self Assessment tax return shows their income from these sources was close to, or over, £50,000.  This letter will let them know that they may need to use Making Tax Digital for Income Tax.

How you should prepare

For more information to help you and your clients, please go to 'Making Tax Digital for Income Tax for agents: step by step'.

You can sign up your clients now

If any of your clients are affected by this change, they’ll need to be signed up for Making Tax Digital for Income Tax by April 2026.

You may also be able to sign up your clients now, before Making Tax Digital for Income Tax becomes mandatory.  Please go to 'Sign up your client for Making Tax Digital for Income Tax'.

From April 2025, you’ll see two options:

Option 1: sign up now for the 2025 to 2026 tax year to prepare your business and clients and to familiarise yourself with the changes. 

This is the best way to help you get ready and test the service.  You and your clients that sign up now will have exclusive access to HMRC’s Making Tax Digital Customer Support Team – they’ll support you with Making Tax Digital for Income Tax and help you with some of your clients’ other income tax queries.

Option 2: sign up for the 2026 to 2027 tax year.

You should discuss the options with your clients and agree which one to choose.

More information 

For more information go to GOV.UK for:

• 'Get ready for Making Tax Digital for Income Tax' to find out more about the benefits of signing up now
• 'Find out if and when you need to use Making Tax Digital for Income Tax' to find out if your clients are automatically exempt or may be able to apply for exemption when the application process opens

Yours faithfully

HM Revenue and Customs”

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If you are a sole trader or a landlord with income (not profit) above £30,000 and need help or just want to talk through some solutions, contact us.

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