Here is what you need to know first.
From 6 April 2026, HMRC will begin rolling out Making Tax Digital for Income Tax (MTD), requiring self-employed people and landlords to overhaul how they report their income. The first wave covers those with combined gross income from self-employment and property above £50,000, based on their 2024/25 tax return figures. The threshold drops to £30,000 in April 2027, and to £20,000 in April 2028. That last figure is gross income, not profit. A window cleaner turning over £20,000 but clearing far less after expenses will still be caught.
Under the new system, affected taxpayers must submit a quarterly update of income and expenses to HMRC, with deadlines falling on 7 August, 7 November, 7 February, and 7 May each year. A final declaration follows by 31 January. Five interactions with HMRC per year, where there was once one. Late submissions earn penalty points under a new points-based system, with a £200 fine triggered at four points. The first cohort joining in 2026 will receive a soft landing on quarterly penalties for their first year, though the final declaration deadline remains fully enforced.
General partnerships are not yet in scope. Limited companies fall under corporation tax and are unaffected. Non-UK residents required to complete the SA109 residence pages have been deferred to 2027 at the earliest.
To comply, you must register for MTD with HMRC before your mandation date, choose HMRC-recognised third-party software, maintain digital records of every transaction, and submit all updates through that software. There are a handful of free or low-cost options on the market, but these are commercial decisions that can be revised at any time.
Now here is what you should know.
HMRC used to operate a free official online filing service. Any taxpayer could log in, complete their Self Assessment return, and submit it directly to HMRC at no cost. No subscription, no third party, no annual fee. It was the tool most unrepresented taxpayers relied on. In the Spring Statement of March 2025, the government confirmed that this service will no longer be available to anyone within MTD. All submissions — quarterly updates and the annual final declaration — must go through commercial software. The government’s explanation was that the market would provide alternatives.
Think about what that means in practice. A private tutor. A delivery driver. A landlord with a single buy-to-let flat. From 2028, if their gross income crosses £20,000, they face four additional reporting obligations every year, a mandatory software subscription, and the administrative burden of learning a new system. Their tax bill has not changed. The date they pay has not changed. The only things that have changed are the compliance burden and the cost of meeting it.
HMRC’s stated justification is that more frequent reporting will reduce errors and close the tax gap — the difference between tax owed and tax collected. This argument has a narrow validity. Some taxpayers do make genuine mistakes when reconstructing a full year of transactions in a January rush. Quarterly records, kept in real time, may reduce those accidental errors. But the tax gap is not composed mainly of accidents. A significant portion comes from deliberate underreporting. Quarterly submissions do not change this at all. Someone who misreports their income annually can just as easily misreport it quarterly. The figures still come entirely from the taxpayer. HMRC’s existing Connect system, which cross-references bank data, Land Registry records, and other government databases, is what actually catches deliberate evasion. MTD has no connection to it and does nothing to strengthen it.
The frequency argument also collapses under its own logic. If quarterly reporting is more accurate than annual, monthly would be more accurate still, and weekly more accurate than monthly. Nobody advocates for weekly filing because everybody understands that would be absurd. The choice of quarterly is not derived from any theory of accuracy. It is the number the government judged it could impose without triggering overwhelming resistance.
The international comparison makes this clearer. In the United States, self-employed individuals make quarterly estimated tax payments to the IRS — actual money, paid in advance, because no employer is withholding on their behalf. The logic is sound. In several European countries, clients withhold a percentage directly from freelance invoices and remit it to the tax authority in real time. That too makes sense. MTD is neither. It requires quarterly reporting without quarterly payment. Tax is still collected once a year in January. The entire exercise produces data for HMRC earlier in the year than before. That benefits HMRC’s systems. It does not benefit the taxpayer in any material way.
The Chartered Institute of Taxation, the Low Incomes Tax Reform Group, and the Association of Taxation Technicians wrote jointly to the government raising exactly these concerns. They pointed out that some affected taxpayers earn too little to owe any tax at all, yet will be legally required to subscribe to commercial software to comply with a reporting mandate that changes nothing about their liability. The government responded by expressing confidence in the software market.
Trusting the market is what governments say when they have decided that someone else should bear the cost of their policy.
HMRC has shed the expense of maintaining a free filing service. Software companies have inherited a captive customer base delivered to them by law. Taxpayers are left with four times the reporting work, a new recurring expense, and no change whatsoever in what they owe. If MTD were genuinely about accuracy, HMRC would have invested in better data-matching. If it were genuinely about fairness, HMRC would have maintained a free filing option. What it has actually produced is a compliance infrastructure that serves the tax authority’s data appetite, costs the taxpayer money to operate, and leaves the software industry considerably better off than before.
