Making Tax Digital for the self-employed

Making Tax Digital is HMRC's programme to replace the annual tax return with digital record-keeping and quarterly updates sent from software. It was announced in the March 2015 Budget as the end of the tax return, consulted on through 2016, delayed for the smallest businesses in 2017, restricted to VAT from April 2019, and finally reached income tax for the self-employed and landlords on 6 April 2026.

Who is in scope

The rules apply to sole traders and landlords by qualifying income, meaning gross turnover and rental income before expenses. The threshold was £50,000 from April 2026, falls to £30,000 from April 2027 and to £20,000 from April 2028. HMRC's estimate for the first wave was around 864,000 people. Those in scope must keep digital records, send a quarterly update for each business or property source through compatible software, and make a final declaration in place of the return. Limited companies, and therefore contractors working through them, are not in scope; Making Tax Digital for corporation tax has no start date.

The first year

Roughly a third of those required to use the system from April 2026 had not registered by the summer, and from September HMRC began enrolling them automatically from its own records. No penalties are charged for missed updates in 2026-27, but the obligation stands, and the points-based late submission penalty regime applies from the second year.

The argument over thresholds

Because the test is turnover rather than profit, the £20,000 threshold of 2028 will bring in sole traders whose earnings are modest, and the Treasury's own timely payments consultation of 2026 proposes to change how those same people pay their tax from 2029. The Freelancer and Contractor Services Association asked in its 2026 Budget submission for the threshold to be frozen at £50,000. The archive's coverage of the programme runs from the 2015 announcement, through the Treasury Committee's warnings of 2016 and 2017 and the deferrals, to the 2026 start.

For contractors

A contractor working through a company reports as before. A sole trader contractor, or a company director with rental income above the threshold, is inside. The practical steps are to confirm qualifying income for 2024-25, choose software, and register before HMRC does it, so that the record HMRC holds is the right one.