HMRC has issued a warning to all self-employed workers who could be affected by changes to income tax
HM Revenue and Customs (HMRC) has issued a crucial warning to all self-employed workers who could be hit by income tax changes. The alterations are linked to the Making Tax Digital for Income Tax scheme, which must be used by all self-employed individuals earning from self-employment, property, or both, with a qualifying income exceeding £30,000.
Remember, qualifying income refers to the total gross income a worker earns in a tax year from both self-employment and property. At present, the service isn’t required – as long as a self-employed person’s qualifying income is £30,000 or less.
However, these thresholds will be raised by £20,000. From April 6, 2026, the Making Tax Digital for Income Tax will only be necessary if a self-employed person’s qualifying income exceeds £50,000 in the 2024 to 2025 tax year.
From the same date, it will also become compulsory for those who meet the eligibility criteria. Moreover, the government plans to make the service mandatory for partnerships, although a timeline for this implementation hasn’t been outlined yet.
Those not affected by the change after April 6, 2026, include sole traders or landlords who haven’t yet submitted their first Self Assessment tax return. However, they can voluntarily sign up at any time if they choose, reports the Manchester Evening News.
What happens if my income is over £50,000?
When you file your Self Assessment tax return for the 2024/25 tax year by January 31, 2026, HMRC will scrutinise your return to confirm that your qualifying income exceeds £50,000. If it does, then the department will notify you in writing that you must start using Making Tax Digital for Income Tax.
If you have a tax agent who handles your taxes, they can undertake this task for you. After receiving this letter, either you or the agent will need to source software that is compatible with Making Tax Digital for Income Tax and then authorise it.
Either you or the agent will then need to register for the service.
Exemptions to Making Tax Digital for Income Tax
Certain individuals may be automatically exempt from using Making Tax Digital for Income Tax. This includes;.
Alternatively, you could apply for exemption if you believe it is not feasible to use the software to maintain digital records or are an active member of a religious society whose beliefs conflict with using electronic communications or maintaining electronic records. Comprehensive details of the exemptions to Making Tax Digital for Income Tax can be found on GOV.UK here