HMRC confirms new income tax change from April for Brits earning over £50k

A sweeping change to the UK tax system is coming for landlords and sole traders, with hundreds of thousands set to be affected. Starting April 6, 2026, anyone with total self-employment or property income over £50,000 will be required to comply with new Making Tax Digital (MTD) rules.

This means they must keep digital records and submit quarterly updates to HM Revenue and Customs (HMRC) using compatible software, replacing the traditional annual Self Assessment tax return. Importantly, the income threshold is based on total gross income, not profit. Around 780,000 people are expected to be affected in the first phase. In the following phase, starting April 2027, the threshold will be lowered to £30,000, bringing in nearly another 970,000 people. From April 2028, the threshold will drop further to £20,000.

With a recent survey showing many do not feel ready, people are being urged to familiarise themselves with the new requirements and start preparing now, including adopting MTD-compatible software and considering joining HMRC's voluntary testing programme to ensure a smooth transition.

Craig Ogilvie, director of Making Tax Digital at HMRC, said: "With April 2026 on the horizon, we are issuing letters to customers we believe will be mandated, outlining specific requirements and timelines.

"We urge those who meet the mandate criteria to join our testing programme on GOV.UK now to help shape the final service and make your transition smoother."

MTD was first introduced for VAT-registered businesses in April 2019, and all qualifying businesses were required to join by April 2022.

An independent report published in 2021 found that 69% of mandated businesses experienced at least one benefit from MTD for VAT, while 67% reported that it reduced the potential for mistakes in their record-keeping.

James Murray MP, Exchequer Secretary to the Treasury, said: "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."

People can find more information about how to sign up for the MTD testing programme here.