Millions of workers to face major tax changes within months
Major tax changes are on the horizon for self-employed Brits from HM Revenue and Customs (HMRC) next year. Sole traders earning over £50,000 will soon be required to use the Making Tax Digital (MTD) service to record their income tax.
The tax shake-up, set to kick off from 6 April 2026, will push more workers towards digital record-keeping. With an estimated 4.4 million self-employed individuals in the UK, it's anticipated that sole traders and landlords - who will also be impacted by the changes - will find submitting their tax returns less time-consuming. HMRC predicts around 780,000 self-employed people and landlords will need to adopt MTD for Income Tax from April 2026, with a further 970,000 joining from April 2027.
Officials suggest that quarterly updates included in the system will spread the workload more evenly throughout the year, bring the tax system closer to real-time reporting, and help businesses manage their finances and avoid the last-minute scramble when it comes to filing their tax returns.
James Murray MP, Exchequer Secretary to the Treasury, has thrown his weight behind the Making Tax Digital (MTD) initiative for Income Tax, hailing it as a crucial part of the government's strategy to improve the UK's tax system and boost economic growth, reports the Express.
He stated: "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share."
He further elaborated on the significance of the new system, saying: "This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth."
Craig Ogilvie, HMRC's Director of Making Tax Digital, weighed in on the sweeping changes, remarking: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax."
More information on how MTD will impact sole traders can be found here..
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