Digital Tax: What’s Changing in 2026?
For many individuals and businesses in the UK, the way tax information is recorded and submitted to HMRC from 2026 will change significantly.
These updates are part of HMRC’s long-term programme known as Making Tax Digital (MTD), which aims to reduce errors, improve accuracy and modernise how taxpayers interact with the tax system.
In this article, we explain what is changing in 2026, who will be affected, and what it means in practice.
A New Way of Reporting Income Tax
The biggest change coming in 2026 is the introduction of Making Tax Digital for Income Tax Self Assessment (MTD for Income Tax).
From 6 April 2026, individuals who earn more than £50,000 a year from self-employment and property combined will need to:
- Keep digital records of their income and expenses
- Use approved accounting software
- Send quarterly updates to HMRC instead of reporting everything just once a year
This marks a clear shift away from the traditional annual Self Assessment tax return. While a year-end declaration will still be required, tax reporting will become more regular and more closely linked to day-to-day record keeping.
The aim is to give both taxpayers and HMRC a clearer picture of income throughout the year, rather than relying on figures submitted many months after the tax year has ended.
Who Needs to Comply and When?
The changes will not apply to everyone at once. HMRC has confirmed a phased approach to help people prepare.
When the changes apply will depend on how much qualifying income you earn, with the thresholds increasing gradually over the next few years:
- From 6 April 2026 – rules will apply to individuals with a qualifying income above £50,000
- From 6 April 2027 – the income threshold will reduce to £30,000
- From 6 April 2028 – the threshold will reduce further to £20,000
The thresholds are based on gross income, meaning income before expenses are deducted. If your combined income from self-employment and property exceeds the relevant level, you will fall within the rules.
This gradual rollout gives taxpayers time to move to digital systems, but it also means many people who have never needed accounting software before will soon be required to use it.
Quarterly Updates: What Will Actually Be Submitted?
One of the most common concerns about MTD for Income Tax is the move to quarterly reporting. It is important to understand what these updates involve.
Each quarter, taxpayers will submit a summary of income and expenses for that period. These updates are not tax bills and do not finalise your tax position. Instead, they provide HMRC with an ongoing view of your income during the year.
At the end of the tax year, you will still complete a final declaration, confirming all income, claiming reliefs and allowances, and agreeing the final tax position. This is similar to the current Self Assessment process, but built on digital records already submitted.
HMRC Moving to Digital Communication
Alongside changes to tax reporting, HMRC is also changing how it communicates with taxpayers.
From March 2026, HMRC plans to make digital communication the default. Rather than receiving most letters by post, taxpayers will be notified through:
- Their HMRC online account
- The HMRC app
- Email alerts directing them to online messages
Paper correspondence will still be available where needed, but this change means it will be more important than ever to keep login details secure and contact information up to date.
Deadlines, Penalties and the Early Transition Period
Quarterly submissions will have set deadlines, and HMRC will use a points-based penalty system for late or missed updates, similar to the system already in place for VAT.
To help taxpayers adjust, HMRC has confirmed a transition period during the first year. During this time, penalties for late quarterly updates will not be charged, giving people space to get used to the new requirements.
However, once this period ends, timely submissions will be essential. Good record keeping and regular reviews will play a key role in avoiding penalties and unnecessary stress.
How Hartley Fowler Can Help
Adapting to digital tax reporting can feel like a big step, particularly if you are used to dealing with your tax affairs once a year. The good news is that you do not have to navigate these changes alone.
We support individuals, landlords and businesses at every stage of the move to digital tax, including:
- Helping you understand when the rules apply to you
- Setting up simple, compliant digital record-keeping systems
- Advising on suitable accounting software
- Managing quarterly updates and year-end submissions
- Providing ongoing guidance, so there are no surprises
Our focus is on making the process clear, manageable and as straightforward as possible, while ensuring you remain fully compliant with HMRC’s requirements.
Need Help Navigating 2026’s Digital Tax Changes?
Planning ahead can make the transition to digital tax much easier and less stressful.
If you are unsure how the 2026 changes will affect you or would like expert guidance to prepare, contact our team today. We can help you understand the requirements and ensure everything is in place for the deadlines.