Making Tax Digital is a government initiative to simplify how businesses and individuals outside the PAYE system manage their tax affairs. It aims to reduce mistakes that cost the UK billions each year by requiring taxpayers to use approved digital software to record, calculate and submit information to HMRC.
Phasing it in
The process began in 2019 with VAT. The next major step is the extension of Making Tax Digital to Income Tax, which will fundamentally change how many people report their earnings.
Self-Assessment Changes
From April 2026, self-employed workers and landlords with gross annual income above £50,000 will need to keep digital records and use software to submit their returns. This includes freelancers, contractors and rental property owners who currently use the Self-Assessment system.
Pilots
The government has already run pilot schemes with businesses and accountants. As a result, financial service providers, such as Worcester Accountants Randall & Payne, will be familiar with the new requirements.
Since this is a major national initiative, it is vital that financial service providers and individual taxpayers all over the country are aware of the new obligations. To return to our example, in Worcester accountants are in generous supply, but in some parts of the UK, services may be more scarce.
Voluntary sign-up is available now for eligible taxpayers. To register, you must be UK-based, up to date with your Self-Assessment, and have the necessary details such as a Government Gateway ID. Over time, more groups will be required to join MTD, making digital record-keeping the norm for UK tax.
