We’re very happy to share a recent article featured in The American magazine written by Garima Gupta, Senior Advisor at Hansen Sweeney.

The UK tax scene is about to change – if you have self-employment or property income, read on.

The UK’s tax landscape is about to undergo implementation of Making Tax Digital (MTD). This is one of the long-standing initiatives of HMRC finally all set to be implemented from the next financial year i.e. 2026-27. MTD is intended to be a game changer and help HMRC save hugely on lost income taxes. Starting April 6, 2026, UK taxpayers with self-employment income and/or property income above certain thresholds will be required to submit quarterly digital records to HMRC. This obligation is in addition to and separate from Self-Assessment tax filing requirements. After four such quarterly submissions during the year, taxpayer will file their tax return at the end of the tax year as usual.

Who needs to file under MTD?

If your gross income (pre-expenses) from rental and/or self-employment is expected to exceed £50,000 during the 2026-27 tax year, you will need to submit quarterly reports to HMRC digitally. The threshold will decrease to £30,000 for the 2027-28 tax year and £20,000 for the 2028-29 tax year.

How will you know if you’re required to file under MTD?

It is your individual responsibility to comply. To assist, HMRC will use your 2024-25 (as filed) Self-Assessment tax return to determine if they think you (may) need to file under MTD. If you are identified in this way, they will also send you a letter.

What does quarterly digital submission consist of?

You will need to submit digital records via MTD-compatible software, which must be HMRC-approved. Each submission will include a summary of all receipts and expenses, detailing the category, date, time, and amount. One submission is required for each activity and so if somebody has two such activities, they would submit two such records every quarter. Remember, there’s no place for conventional recordkeeping in the new digitalized system.

Key Dates and Penalties

Quarterly submissions are time-bound, and late submissions will incur penalties (dates below). The penalty system works on a point-based system, where you will receive a penalty point for each late submission. Once you reach the threshold, you will be required to pay a penalty. [see table]

Get Ready for MTD

Professional income tax return preparers can start advising their clients now on how to prepare for MTD. If you are required to file under MTD, you can voluntarily sign up for the 2025-26 tax year to test and try the system before it becomes mandatory (check with your tax preparer or software provider). Do not wait until it is too late, and make sure you are MTD-ready by:

• Keeping digital records
• Using MTD-compatible software
• Submitting quarterly reports on time
• Staying informed about MTD updates and changes

By being prepared, you will avoid penalties and ensure a smooth transition to the new tax regime.

See the article and magazine issue here.

Garima Gupta is a Senior Advisor at Hansen Sweeney specialising in US/UK expat taxes g.gupta@hansensweeney.co.uk