Thousands of landlords, freelancers and self-employed workers are now receiving warnings from HMRC about a major tax rule change that could soon become a legal requirement – with some needing to comply from next April.
HMRC has begun contacting customers about the rollout of Making Tax Digital (MTD) for Income Tax, which will completely change how millions of people report earnings from self-employment and property income.
And many people may not realise they are already on course to be affected.
In guidance sent to customers, HMRC warned: “If you get income from self-employment and/or property, you’ll legally need to use Making Tax Digital for Income Tax” once earnings pass certain thresholds.
The key dates households are being told to check now
Under the phased rollout, the rules will apply from:
The thresholds are based on turnover rather than profit – something experts say could catch many people out.
That means landlords, side hustlers and sole traders with relatively modest profits could still be pulled into the system if their total income exceeds the limit.
What HMRC says people need to do
Under Making Tax Digital, affected taxpayers will no longer simply file one annual Self Assessment tax return.
Instead, they will need to:
HMRC said the changes are now a “legal requirement” for those crossing the thresholds.
The tax authority is urging people to prepare early, warning customers to start “making informed software choices” and consider “practical steps you can take to prepare your business”.
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The groups most likely to be affected
The changes apply to income from:
HMRC is also specifically targeting sole traders and landlords without accountants or bookkeepers with additional webinars and guidance.
In one message to customers, HMRC said: “If you’re a sole trader or landlord without an accountant or bookkeeper… get the latest information about MTD, to help you get ready.”
The sessions will explain:
Why some people may not realise they are affected
Experts warn that many people still assume the rules only apply to larger businesses.
But the final £20,000 threshold from 2028 is expected to draw in huge numbers of smaller landlords, freelancers and side hustlers.
The fact that the thresholds are based on turnover – before expenses are deducted – could also catch people off guard.
Someone earning rental income alongside freelance work could breach the limit far earlier than expected.
HMRC launches webinars and online help
HMRC is now encouraging people to attend official webinars ahead of the rollout.
Separate sessions are being offered for:
The tax authority has also published online videos explaining “How do I sign up for Making Tax Digital for Income Tax”.
HMRC said the webinars will help customers understand “what you need to do”, “who will be affected” and how to get ready before the legal deadlines arrive.
Have you signed up for Making Tax Digital? Tell us in the comments below.
