Sole traders and landlords are being urged to learn if they are among the 864,000 people who will be affected by Making Tax Digital changes this week.
What is Making Tax Digital?
Making Tax Digital (MTD) is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.
Eventually, all businesses will need to keep digital records by using HMRC approved MTD compatible software, which will then need to be submitted every quarter.
This will help to bring the tax system closer to real-time.
Who will be affected?
The year that MTD for Income Tax becomes mandatory depends on your earnings, so if you are self-employed or a landlord, you will be affected from:
- 6th April 2026, if you have an annual business or property income of more than £50,000
- April 2027, if you have an annual business or property income of more than £30,000
- April 2028, if you have an annual business or property income of more than £20,000
HMRC data indicates that this first wave of people affected represents a significant number of taxpayers who will need to adapt to new reporting requirements.
Of the 864,000 nationwide, around 167,000 are from London, while more than a quarter of a million are in the construction sector.
Need help deciding between Limited or Umbrella? We are happy to help- give Sophie a call on 01442 795 100 or email sophie.lewis@dolanaccountancy.com
Advice for taxpayers
The Association of Taxation Technicians (ATT) is advising that taxpayers:
- Check whether their income brings them within the new rules
- Ensure they have compatible software in place
- Consider seeking professional advice where needed
Emma Rawson, ATT Director of Public Policy, said, “Making Tax Digital is one of the biggest changes to the tax system in years, and around 850,000 taxpayers will be in scope from the outset.
“While the wider tax system involves very large sums of money, it’s the number of individuals who will need to change how they keep records and report to HMRC that is most striking here.
“With just one week to go, now is the time to act. The first deadline may not be until August, but taxpayers need to start keeping digital records from April.
“It’s not too late to get ready – check if you’re affected, get the right software in place, and seek advice if you need it.”
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