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Act now: 864,000 sole traders and landlords face new tax rules in two months

ended 05. February 2026

Thoughts on the below ASAP please. 

SOLE traders and landlords earning more than £50,000 from self-employment and property are being urged by the government to act now with two months left to prepare for Making Tax Digital (MTD) for Income Tax.

From 6 April 2026, those eligible will need to use recognised software to keep digital records and send HM Revenue and Customs (HMRC) light-touch quarterly updates of their income and expenses. These are not extra tax returns.

Free software options are available and once income and expenses are recorded, the software generates a simple summary to send to HMRC.

At the end of a tax year, those within MTD for Income Tax will still need to file a tax return by the following 31 January – but the software will already hold the information from the quarterly updates, meaning no last-minute hunt for records or receipts.

Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully. This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax. Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.”

Thousands of sole traders and landlords have already signed up for MTD for Income Tax, with more than 20,000 quarterly updates successfully submitted through a voluntary testing programme.

Those joining MTD in April 2026 will still file their tax return for the 2025 to 2026 tax year in the usual way by 31 January 2027, as this covers the period before MTD begins. The first MTD tax return, covering the 2026 to 2027 tax year, will be due by 31 January 2028.

To support the transition, the government has announced that customers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates, for the first 12 months.  

Under the new system, penalty points will be given for each late submission, with a £200 penalty only applied once four points are reached. This means occasional slip-ups won’t result in immediate fines.

3 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
MTD should stand for Making Tax Difficult because these rules will catch nearly a million new people who have to keep digital records. Landlords are the ones who feel most aggrieved as some could be in the situation through circumstance, and now fund themselves having to have the skills of an accountant to submit quarterly returns to HMRC. Non compliance will be through the roof as you need a degree in computer science to work some of this software. HMRC and the government need a rethink.
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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
Making Tax Digital (MTD) is a highly urgent, high-stakes update for a significant portion of the UK's self-employed and property-owning population. Starting in the new tax year on 6 April, the UK tax system undergoes a major shift as MTD becomes mandatory for sole traders and landlords with gross income over £50,000. This requires moving from a single annual filing to four digital quarterly updates plus a final declaration, representing a significant change in admin frequency. The current two-month window is the final call to secure MTD-compatible software, as traditional paper records or the old HMRC portal will no longer suffice for these updates. The threshold is based on total turnover, not profit, so combined income from trade and property must be calculated carefully. Act now to digitize your records and select a software provider to avoid the stress of this fundamental change to your tax obligations.
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Rohit Parmar-Mistry
Founder at Pattrn Data
Let’s call this what it is: HMRC outsourcing its data entry to sole traders and landlords, with the threat of fines if we don't play along.

The government claims these quarterly updates are 'light-touch', but for a busy tradesperson or a freelance creative, that’s four strict deadlines a year instead of one. In our technology audits, we see this pattern constantly: systems designed entirely for the benefit of the organisation collecting the data, with zero regard for the humans who actually have to input it.

The promise that 'software makes it simple' is a dangerous fallacy. Digitising a complex, broken process doesn't fix it; it just speeds up the rate at which people can make mistakes. And now, thanks to the new points-based penalty system, those mistakes are just easier for HMRC to track and monetise.

If a private company forced a mandatory system this user-unfriendly on its clients, they’d lose every customer overnight. HMRC, unfortunately, has a monopoly on our time.