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Two million Brits face being forced to file more than 10 financial updates a year: “Yet another administrative weight added to an already heavy load”

ended 23. February 2026

OVER two million Brits face being forced to file more than 10 financial updates a year under new HMRC rules that are “yet another administrative weight added to an already heavy load”.

In just two months, Making Tax Digital (MTD) will go live – a new way for sole traders and landlords to report income and expenses to HMRC. 

Many are “simply unprepared” for MTD and “awareness is still incredibly low” among individuals affected, experts have warned.

The new system is a UK government initiative aimed at modernising the tax system by requiring businesses and landlords to keep digital records and submit quarterly tax updates to HMRC using compatible software. 

It replaces manual, annual, or paper-based reporting with a digital, real-time process, with MTD for VAT already mandatory and MTD for Income Tax (MTD for ITSA) rolling out from April 2026.

For individuals, MTD for ITSA will be introduced in two phases: from April 2026, for those with qualifying income over £50,000, and from April 2027, for those with qualifying income over £30,000.

But experts have warned that it could mean the number of financial updates needed to be sent by small business owners is over 10.

Someone who is a self-employed plumber will have to file five times a year, four quarterly updates plus the tax return, and if they are a landlord too then that doubles the amount of financial updates needed to be filed.

Taryn Lee Johnston, Owner at Lincoln-based The FCM Group, said it feels like yet another hit for small businesses.

She added: "For many self-employed people and small business owners, this feels like yet another administrative weight added to an already heavy load. Quarterly reporting under Making Tax Digital was sold as a way to modernise the system. The concern is not just frequency, but cost, time and mental bandwidth. Many small business owners do not have in-house finance teams. 

"They will either need to pay accountants more or spend more hours on compliance rather than growing their businesses. At a time when the UK says it wants to encourage entrepreneurship and economic growth, increasing administrative burden sends a conflicting message. 

“Small businesses are already facing rising costs, higher taxes and tighter margins. Adding more reporting requirements risks pushing some to question whether it is worth staying self employed at all. Modernisation is not the problem, the scale and pace of the burden is.”

Steven Greenall, Mortgage and Protection Advisor at Rayleigh-based Protect & Lend, said preparation is key.

He continued: “There is no doubt Making Tax Digital will feel onerous at first, especially for sole traders and landlords used to filing once a year. The shift to quarterly reporting and digital systems will bring a learning curve and possibly extra costs. However, after the first few quarters, it should become routine. Those who prepare early and put the right systems in place will find the transition far more manageable.”

Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, said over two million will be affected.

She added: “The numbers are staggering. HMRC estimates 780,000 people will be drawn in from April 2026, with a further 970,000 from April 2027. By 2028, when the threshold drops to £20,000, over one million more will be added, pushing the total well past two million. 

"The government has also openly said it wants to eventually pull in the four million sole traders and landlords earning below £20,000. That's people earning less than minimum wage being forced into quarterly digital reporting. For someone with a small side-hustle business and, say, a rental property, that's at least eight filings a year. 

"Add more income sources and yes, you could hit double figures. The real question is proportionality: what does HMRC gain from quarterly chasing someone earning less than a full time worker on minimum wage? The compliance cost on the nation's mood, the software and admin overhead for people already stretched thin will easily dwarf any tax recovered.”

Patricia Ogunfeibo, Founder & non-practicing Solicitor at London-based tenant2owner, said the penalties for not filing the returns could get expensive.

She continued: "This also hits landlords on top of all the other recent reforms. What worries many is that if they miss a deadline, they’ll get a penalty point. Four points and a £200 fine is triggered, with another £200 for every next late filing. Late payment penalties also apply: 3% if tax is unpaid after 15 days, a further 3% after 30 days, then 10% per annum accruing daily - on top of HMRC interest. 

"Once the penalty threshold is hit, the resetting to zero might prove difficult, requiring 12 months of perfect filing plus all returns from the previous 24 months up to date. 

“What many ‘key persons’ aren’t appreciating, is that if they are incapacitated, car crash, say, these penalties may accrue, and not putting a process in place to ensure compliance if incapacitated, may kill any chance of raising a reasonable excuse argument to quash the penalties.”

 


 

6 responses from the Newspage community

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Editor
Kate Allen
Owner at Finest Stays
For many small operators, this risks sucking the time away from perfectly productive people who should be focused on actually running their businesses, not wrestling with yet more admin. Most of our holiday homeowners sensibly have accountants in place to handle this, but plenty of self sufficient landlords will find themselves dragged into the digital quagmire.

From my perspective as a business owner, it is also another cost pressure quietly landing on the balance sheet. Compliance rarely comes free, and for many it simply means higher accountancy fees for doing broadly the same job more often.
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Editor
Patricia Ogunfeibo
Founder & non-practicing Solicitor at tenant2owner
This also hits landlords (but not company ones) on top of all the other recent reforms. From 6 April, those with qualifying gross income over £50k will be caught. dropping to £30k in 04/27 and £20k in 04/28.

What worries many is that if they miss a deadline, they’ll get a penalty point. Four points and a £200 fine is triggered, with another £200 for every next late filing. Late payment penalties also apply: 3% if tax is unpaid after 15 days, a further 3% after 30 days, then 10% per annum accruing daily - on top of HMRC interest!

Once the penalty threshold is hit, the resetting to zero might prove difficult, requiring 12 months of perfect filing plus all returns from the previous 24 months up to date.

What many ‘key persons’ aren’t appreciating, is that if they are incapacitated - car crash, say, these penalties may accrue, and not putting a process in place to ensure compliance if incapacitated, may kill any chance of raising a reasonable excuse argument to quash the penalties.
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Editor
Steven Greenall
Mortgage and Protection Advisor at Protect & Lend
There is no doubt Making Tax Digital will feel onerous at first, especially for sole traders and landlords used to filing once a year. The shift to quarterly reporting and digital systems will bring a learning curve and possibly extra costs. However, after the first few quarters, it should become routine. Those who prepare early and put the right systems in place will find the transition far more manageable.
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David Belle
Founder and Trader at Fink Money
What’s the point of doing anything in the uk anymore?

Asked to file more times per year, to pay more tax, for worsening services while pay for the bottom has increased massively and pay for anyone who does anything that actually boosts gdp in an exponential way has gone down over the past 2 decades.

You’ve got a generation that can’t afford a home, graduates with zero graduate premium and sheer pessimism everywhere.

Then you’re asking the productive class to become more unproductive while £4.5bn more is allocated to SEND education, the definition of SEND being that ‘my child has ‘adhd’ (because they’re stuck infront of YouTube for 5 hours per day because they’re parents can’t be bothered to do anything with them).

It’s a complete joke. I have to return to London once per month, and where I used to stay overnight I now come early and leave in the afternoon so I don’t get sucked back into the uk misery.
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Taryn Lee Johnston
Owner at The FCM Group
For many self employed people and small business owners, this feels like yet another administrative weight added to an already heavy load.

Quarterly reporting under Making Tax Digital was sold as a way to modernise the system.

The concern is not just frequency, but cost, time and mental bandwidth. Many small business owners do not have in house finance teams. They will either need to pay accountants more or spend more hours on compliance rather than growing their businesses.

At a time when the UK says it wants to encourage entrepreneurship and economic growth, increasing administrative burden sends a conflicting message. Small businesses are already facing rising costs, higher taxes and tighter margins. Adding more reporting requirements risks pushing some to question whether it is worth staying self employed at all.

Modernisation is not the problem, the scale and pace of the burden is.
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Colette Mason
AI Ethics Consultant at Clever Clogs AI
The numbers are staggering. HMRC estimates 780,000 people will be drawn in from April 2026, with a further 970,000 from April 2027 (Daily Record). By 2028, when the threshold drops to £20,000, over one million more will be added (ICAEW), pushing the total well past two million. The government has also openly said it wants to eventually pull in the four million sole traders and landlords earning below £20,000 (Business & Accountancy Daily). That's people earning less than minimum wage being forced into quarterly digital reporting. For someone with a small side-hustle business and, say, a rental property, that's at least eight filings a year. Add more income sources and yes, you could hit double figures. The real question is proportionality: what does HMRC gain from quarterly chasing someone earning less than a full time worker on minimum wage? The compliance cost on the nation's mood, the software and admin overhead for people already stretched thin will easily dwarf any tax recovered.