Britons with a combined gross income of £50,000 or more from sole trades and property in the 2024/25 tax year have become subject to new rules requiring them to file updates on their income and expenses online from today (Monday, April 6). HMRC first introduced its Making Tax Digital (MTD) scheme for VAT-registered businesses in 2022 as part of a phased transition to an all-digital service, and is now starting to make individual taxpayers part of it.

People with £50,000 of gross annual trading and/or rental income were told to sign up to the initiative for income tax before it was introduced today unless they fall into an exempt group. Some of these taxpayers will be exempted automatically, while others won’t – so it’s important to check the official guidance. Eligible people in the £50,000 bracket now need to file updates four times a year in addition to their annual tax return (which is when they pay), and use approved software to submit with them.

And while the switch to quarterly filings begins from today, HMRC says are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year, a grace period put in place as people adapt to the new rules.

But fines will be issued for not keeping records at all, and existing penalties for late filing of tax returns or payment still applies.

It marks stage one of the three-phase Making Tax Digital for Income Tax programme HMRC is bringing into effect across the next three tax years, The Chartered Institution of Taxation (CIOT) explains.

Sole traders, and landlords with qualifying income of £30,000 for the 2025 to 2026 tax year will need to start using the system from April 6, 2027.

Those with £20,000 of qualifying income for the 2026 to 2027 tax year will need to switch to the new reporting rules from April 6, 2028.

Ellen Milner, CIOT’s Director of Public Policy, said: “Spring is a time of fresh starts, and for taxpayers it also marks the arrival of a new tax year and new tax rules.

“The most contentious change being made this April is bringing business and agricultural assets into the scope of inheritance tax, albeit with an additional allowance and being taxed at a lower rate.

“This will mean many more valuations of estates will be required. Farmers and business owners potentially in scope will need to pay careful attention to their tax planning.

“However, for many, the most significant tax event of this new tax year is the first phase of Making Tax Digital for Income Tax – bringing the government’s flagship initiative for digitalising the tax system to nearly 900,000 self-assessment taxpayers.

“Over the next three tax years HMRC plans to bring 2.9 million self-assessment taxpayers into the programme, requiring them to use compatible software to keep digital records and submit quarterly updates and an annual return.”

You can find the official guidance and eligibility rules on the UK Government website.