HM Revenue and Customs (HMRC) are writing to some taxpayers to tell them what they need to do to get ready for the new Making Tax Digital rules that come into force next April.
What is Making Tax Digital?
Making Tax Digital for Income Tax is a new way for sole traders and landlords to provide their business accounts and tax information to HMRC.
It involves using software to maintain digital accounting records and then submit reports to HMRC each quarter.
From 6 April 2026, Making Tax Digital will be mandatory for almost all sole traders and landlords who had gross income over £50,000 in the 2024/25 tax year.
Why have you received a letter?
If your 2024/25 tax return has already been filed and your total gross income from self-employment and/or rental income is more than £50,000, then HMRC are likely to have written to you.
It is worth noting that even if HMRC have not sent you a letter but your income from self-employment and/or rental income for the 2024/25 tax year is more than £50,000, you will still be required to follow the new Making Tax Digital rules from next April.
What to do next
A small minority of taxpayers may be exempt from the new rules, so you may want to check this first. For instance, if it is not reasonable for you to use software to keep digital records or submit them to HMRC, it is possible to apply for exemption. HMRC would then confirm whether they accept your application.
Otherwise, you will need to:
- Choose compatible software to keep the digital records needed for the new system. If you already use software to manage your accounting information, check with your provider that the software is ready for Making Tax Digital.
- Sign up on GOV.UK for Making Tax Digital for Income Tax.
If you need any help with signing up, choosing software or submitting reports to HMRC, please get in touch. We can offer you anything from tailored advice to a full Making Tax Digital service designed to give you peace of mind.
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