The taxman has issued a warning to all self-employed workers who have less than a year to prepare for a major shake-up.
HM Revenue and Customs (HMRC) has issued a six-month warning to all self-employed workers about an impending major overhaul. The Making Tax Digital for Income Tax scheme, which will be mandatory for all self-employed people earning more than £30,000 from self-employment, property, or both, is set to launch in less than a year.
It’s important to note that the qualifying income refers to the total gross income a worker receives in a tax year from both self-employment and property. At present, the service is not compulsory as long as a self-employed person’s qualifying income is £30,000 or less.
However, forthcoming changes will see this threshold increase by £20,000. From 6 April 2026, the Making Tax Digital for Income Tax scheme will only be obligatory 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. In a statement on X, HMRC said: “There’s just 6 months to go until Making Tax Digital for Income Tax. From April 2026 there will be a new way to report income from self-employment and property to us.
“Check if you need to sign up for the next tax year.”
Furthermore, the government plans to make the service mandatory for partnerships, although a timeline for this implementation has yet to be established.
Those unaffected by the changes after 6 April 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 wish.
What happens if my income exceeds £50,000?
When you submit a Self Assessment tax return for the 2024/25 tax year by 31 January 2026, HMRC will review your return to confirm that your qualifying income is over £50,000. If it is, the department will get in touch with you to confirm this and will indicate that you need to start using Making Tax Digital for Income Tax.
If you have an agent handling your taxes, they can carry out this task for you. After this correspondence, either you or the agent will need to find software that’s 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 people may be automatically exempt from utilising Making Tax Digital for Income Tax. This includes:
- non-resident company
- personal representative of someone who has died
- trustee, including a charitable trustee or a trustee of non-registered pension schemes
- Lloyd’s member, in relation to your underwriting business
- person that does not have a National Insurance number — this only applies for a tax year where you do not have a National Insurance number on 31 January before the start of that tax year
Otherwise, you could apply for exemption if you believe it is not practical to use the software to keep digital records or are a practising member of a religious society in which the beliefs are incompatible with using electronic communications or keeping electronic records. Full details of the exemptions to Making Tax Digital for Income Tax can be found on GOV.UK here.
If you’re not sure whether you need to sign up for the digital service next year, you can run a check here.