Anyone who earns above £20,000 a year and self-employed, including landlords and those who pay their tax using self assesement, will be affected by a major upcoming tax deadline change.
The Chancellor Rachel Reeves confirmed the final date on which self-employed workers and landlords with annual income of above £20,000 had to comply with the government’s Making Tax Digital (MTD) system.
MTD is an HMRC intiative which means businesses have to use a digital system to keep tax records, submit tax data and make payments.
In her budget last autumn, Ms Reeves said sole traders and landlords with incomes above £50,000 would have until April 2026 to comply with the tax changes, while those with incomes above £30,000 had until April 2027. On Wednesday, during her Spring Budget, she confirmed the deadline for those with incomes above £20,000 would be April 2028.
MTD has already been rolled out among VAT-registered businesses and is slowly being extended to all businesses who pay their tax directly to HMRC
Most companies and sole traders who use accounting software will be able make the switch, those who do not will need to make sure they have the right software in place. Most applications are MTD compliant.
There are around 4.39 million self-employed workers in the UK and about 2.8 million landlords, 90% of which are private landlords renting a single property.
- From 6 April 2026, landlords will be required to register for MTD for IT where their turnover (gross income before deductions) is more than £50,000 per annum.
- From 6 April 2027, landlords with turnover of more than £30,000 per annum will be required to register for MTD.
- Inthe autumn Budget 2024, it was announced that a third phase would be introduced where landlords with turnover of £20,000 per annum will also be required to join MTD for IT, on Wednesday’s spring statement it was confirmed as 6 April 2028
You’ll need to use Making Tax Digital for Income Tax if all of the following apply:
- you’re an individual registered for Self Assessment
- you get income from self-employment or property, or both
- your qualifying income is more than £30,000
Your qualifying income is the total gross income that you get in a tax year from self-employment and property.
Find out what’s included in your qualifying income.
HMRC may consider granting an exemption if there’s something that prevents you from complying fully with the scheme’s requirements.
Your business might be exempt if, for example:
- you lack internet access at your business premises and are unable to relocate somewhere that does have access
- your age or disability stops you using electronic devices for the time it takes to manage digital tax records
- you or your business are in the process of becoming insolvent
- using electronic devices or keeping electronic records goes against your religious beliefs
- you’re already exempt from submitting VAT returns online
If you feel your business may be exempt from MTD, you need to contact HMRC.
