HMRC announces they are sending letters to taxpayers who will need to report quarterly
HMRC announces they are sending letters to taxpayers who will need to report quarterly
In another push to drive awareness about Making Tax Digital (MTD) for Income Tax, HMRC is writing to thousands of taxpayers with income over £50,000 who will fall under the reporting net!
From April 2026, landlords and the self-employed /sole traders with income in excess of £50,000 from earnings and rental income will have to report quarterly under MTD for Income Tax.
Now HMRC is starting to send letters out to taxpayers to advise them to prepare for the changes.
HMRC have estimated that nearly 900,000 taxpayers will be dragged into the first phase of MTD for Income Tax and the letter is being sent to individual taxpayers who have already submitted a 2024-25 tax return by August of this year. The letter informs them that based on their disclosed income reported in their self-assessment tax returns, they will have to report under MTD from April 2026.
For taxpayers, the new rules mean they have to create and store digital records of their self-employment and property income and expenses and then send quarterly updates to HMRC split between the different types of income so earnings and property rentals are separate, and then also submit their tax return and pay tax due by 31 January the following year.
HMRC will not provide any free software to do MTD for Income Tax, but here at Kennedys Accounting, we are ready for the changes and will be able to assist.
While MTD is racing down the track, it is important to note that the first actual quarterly return will not be required by HMRC until 7 August 2026, but you will need to start your record keeping from 7 April 2026 to prepare the first quarterly return.
This is a major overhaul of the current self-assessment tax return system, which will see all affected taxpayers forced to use digital reporting software to report their quarterly earnings to HMRC. Then at year end, they will have to file a final in-year update, which can include adjusted numbers. It is essential to be prepared for this major change as penalties will be in place for non-compliance and HMRC has not indicated that it will take a lenient approach in year one.
Here at Kennedys Accounting, we are ready to assist with your MTD requirements, so get in touch!