Global Daily Tax News, UK Making Tax Digital For Income Tax Looming, (Aug 22, 2025)

HM Revenue and Customs has newly confirmed that almost one million self-employed taxpayers and landlords will be required to comply with Making Tax Digital reporting requirements from April 2026.

In figures published this week, HMRC said an estimated 864,000 self-employed businesses and landlords are likely to be affected by MTD from April 2026, and around 216,000 of these taxpayers are not represented by an accountant or tax adviser.

From April 2026, self-employed individuals and landlords with an income of more than GBP50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.

Draft legislation released by HMRC last month provided that these requirements will apply to taxpayers with income of GBP20,000 or more starting from the tax year 2026-27.

The Chartered Institute of Taxation's Low Incomes Tax Reform Group (LITRG) has expressed concerns that many taxpayers are unaware of what MTD is or what it entails.

Victoria Todd, Head of LITRG, said: "MTD represents the biggest change to income tax in a generation, and these new figures from HMRC provide a helpful indication of the number who will be affected in the coming years."

"The requirement to take part in MTD from April 2026 is based on a person's 2024/25 tax return data. We are therefore urging taxpayers with self-employment and/or rental income to prepare and submit their tax returns for the year ended 5 April 2025 as soon as possible, so they are clear as to whether they will be legally required to participate in MTD from April 2026."

"HMRC's figures also show that, of unrepresented taxpayers potentially within the scope of MTD next year, 79 percent did not use any commercial software to complete their 2023/24 tax returns. Using MTD compatible software from April 2026 will likely be a very big change for them. Even those who do currently use commercial software to complete their tax returns may well find they need different software to meet the MTD digital record keeping requirements. For some people, choosing software and learning to use it will be daunting and time-consuming," Todd said.

"HMRC have confirmed that it will be possible for some people to apply for an exemption from MTD if they meet certain criteria, for example if they are digitally excluded. We are still awaiting confirmation from HMRC as to when this exemption service will launch," she concluded.