Self-employed workers with a turnover of £50,000 or more will need to file tax returns through the Making Tax Digital (MTD) system from 6 April, HM Revenue and Customs (HMRC) has announced. The new requirement applies to sole traders, landlords, and individuals who receive income from self-employment or property, or both, according to HMRC.
The MTD system mandates real-time reporting of income and expenses, replacing the traditional annual tax return. This shift aims to streamline tax compliance and reduce errors, but it also imposes new obligations on affected taxpayers. Exemptions from MTD are available for certain groups, including those without a National Insurance number, disabled people receiving blind person's allowance, individuals receiving care relief who earn income from property or self-employment, and limited companies. HMRC has not specified the exact deadline for signing up for MTD, nor the penalties for non-compliance. It also remains unclear how the system will affect those with turnover below £50,000 in the future, and whether tax payments will be handled once or twice a year.
To assist with compliance, ANNA, a business account provider, offers a fully automated system for MTD compliance, according to the company. Other software options are available, but HMRC has not provided a comprehensive list. The extension of MTD is part of a broader government push to digitise tax administration, with further expansions expected in coming years. Self-employed individuals with turnover above the threshold should prepare for the new digital reporting requirements, which may require adopting compatible software and adjusting record-keeping practices. HMRC has indicated that MTD will eventually be extended to all self-employed taxpayers, though no timeline has been announced for those with turnover below £50,000.