Major HMRC tax change to affect how self-employed people keep records within months

Many self-employed people are set to see major tax changes from HM Revenue and Customs (HMRC) next year.

Self-employed people who own their own business, otherwise known as sole traders - who also earn over £50,000 - will soon be required to use the Making Tax Digital (MTD) service to record their income tax. The tax changes, which are set to start from April 6, 2026, will see more workers move towards digital record-keeping.

There are believed to be around 4.4 million self-employed workers in the United Kingdom. It is expected that sole traders and landlords, who will also be affected by the changes, will save time when it comes to sending in their tax returns. HMRC estimates that around 780,000 self-employed people and landlords will need to adopt MTD for Income Tax from April 2026, with an additional 970,000 joining from April 2027.

Quarterly updates included in the system will also distribute the workload more evenly throughout the year, officials say, bring the tax system closer to real-time reporting, and assist businesses in managing their finances and avoiding the last-minute rush when it comes to making their tax returns.

James Murray MP, Exchequer Secretary to the Treasury, has expressed his support for the Making Tax Digital (MTD) initiative for Income Tax, describing it as a key element of the government's strategy to enhance the UK's tax system and stimulate economic growth.

He said: “MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share."

He added: “Expanding on the vital importance of the new system, he announced: "This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth."

Craig Ogilvie, HMRC's Director of Making Tax Digital, commented on the comprehensive reforms to say: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax."

Further details on how MTD will affect sole traders can be found here.