A significant change in tax reporting awaits landlords and self-employed individuals across Devon and the United Kingdom as HM Revenue and Customs (HMRC) prepares to extend the Making Tax Digital (MTD) regime. From April 2026, those earning above £50,000 from self-employment or property will need to comply with new digital accounting and reporting standards.
HMRC is urging those affected to take steps now to adapt to the forthcoming requirements, aimed at streamlining tax administration and reducing errors.
Scope of the new tax requirements
Under the revised government policy, approximately 864,000 landlords and self-employed individuals with annual incomes above £50,000 must transition to digital record-keeping. The move forms part of the broader Making Tax Digital initiative which seeks to modernise the tax system and ensure consistent, accurate submissions.
The change mandates that both property and business income are reported digitally, introducing a new compliance threshold. HMRC states that the requirement will not affect those with earnings beneath the specified limit.
Implementation timeline and guidance
The new rules will come into effect on 6 April 2026. In advance of this, HMRC advises those impacted to select compatible software and become acquainted with digital processes. Craig Ogilvie, Director of Making Tax Digital at HMRC, encouraged early preparation, saying the system is “straightforward and helps reduce errors.”
Official guidance, webinars, and video tutorials are available to support the transition. HMRC emphasises that prompt preparation will help individuals avoid the typical rush to complete self-assessment tax returns near the January deadline.
Digital record-keeping and quarterly updates
Once implemented, taxpayers subject to MTD must keep digital records and submit quarterly summary updates of income and expenses to HMRC using approved software.
These quarterly updates are designed to provide more timely visibility of tax obligations throughout the year. While quarterly returns will become mandatory, the requirements do not replace the existing annual self-assessment tax return, which will still be due by 31 January following the end of the tax year.
Exemptions and HMRC support measures
HMRC has outlined exemptions for those unable to use digital tools, such as individuals with certain disabilities or those without access to adequate internet services.
Supporting resources including online guidance, webinars, and a voluntary pilot programme are available, with over 12,000 quarterly updates already submitted through the pilot scheme. HMRC assures that applications for exemption will be considered on a case-by-case basis where digital reporting is not feasible.
Penalties and compliance leniency
To ease the transition, individuals joining from April 2026 will not receive penalty points for late quarterly submissions within the first 12 months.
Thereafter, a penalty will only be imposed if four points are accumulated, rather than for the first occasional missed update. This adjustment aims to support compliance without imposing immediate financial penalties.
Final Summary
The extension of Making Tax Digital to landlords and self-employed workers with incomes over £50,000 is a significant development in the UK’s tax administration landscape.
By mandating digital record-keeping and quarterly submissions, HMRC aims to promote greater accuracy, transparency, and convenience for taxpayers, while also streamlining the agency's oversight. Those affected are encouraged to begin preparing well in advance, using the available guidance and trialling suitable software.
While the new obligations present challenges, transitional exemptions and relaxed penalty rules are intended to ease the shift. For those managing complex finances or multiple income streams, monitoring changes via financial technology platforms, such as Pie, may assist in adapting efficiently to the evolving reporting landscape.
