A new tax system is coming – here’s what the self-employed and freelancers need to know
Millions warned of changes to the tax system
- Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will be introduced from 6 April 2026 for sole traders and landlords.
- Initially, it applies to those with combined gross income from self-employment or property exceeding £50,000 annually, with the threshold decreasing to £30,000 in April 2027 and £20,000 in April 2028.
- Affected individuals must keep digital records and use HMRC-compatible software to submit four quarterly income and expense updates, followed by a final annual declaration, replacing the traditional self-assessment tax return.
- While the government aims to modernise the tax system, critics highlight poor communication from HMRC, potential increased costs for taxpayers, and a significant lack of awareness among those affected.
- A new points-based penalty system for non-compliance will commence in April 2026, with points accruing for late quarterly submissions, leading to fines.