Self-Assessment Is Changing: What Making Tax Digital Means for You

Self-assessment is changing. If you're self-employed or you rent out property, you'll soon send HMRC short updates four times a year instead of once. It's called Making Tax Digital for Income Tax, and whether it hits you depends on how much you bring in.

It's already live for the biggest earners. It's coming for everyone else over the next two years. This guide covers what's changing, who it affects, and what to do now.

One bit of good news: if you only have a limited company, this doesn't change anything for you. It's for sole traders and landlords

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So what's actually changing?

Until now, sole traders sent HMRC one tax return a year. You added everything up after the year ended, sent it in by 31 January, and paid what you owed.

Under the new rules you do three things:

• Keep your records digitally. In accounting software, not a shoebox or a paper notebook.

• Send HMRC a short update every three months. Just your totals for income and expenses. It's a summary, not a mini tax return.

• Send one final tax return after the year ends. HMRC calls it a final declaration. It's the same job as your old return, done in your software, still due by 31 January.

Your tax bill doesn't change because of this. You still pay tax on the same profits, and the payment dates stay the same. What changes is how often HMRC hears from you.

Who has to do it, and when?

It depends on your qualifying income. That's your self-employment income and your property income added together, before you take off any expenses. Think of it as your turnover, not your profit.

Start date	You're in if your qualifying income is…
6 April 2026 (already started)	Over £50,000
6 April 2027	Over £30,000
6 April 2028	Over £20,000

The income HMRC looks at comes from your tax return for an earlier year, not the year you're in. HMRC used your 2024-25 return to decide who started in April 2026. They'll write to people they think are affected, but you're expected to check your own figures, so don't wait for a letter.

A few things people get wrong:

• Self-employment and rental income are added together. £27,000 from your business plus £25,000 of rent is £52,000, which is over the line.

• Jointly owned property counts as your share. If you and a sibling own a flat that brings in £50,000, you each count £25,000.

• Some income doesn't count at all. Wages from a job, dividends (including from your own company), pensions and your share of a partnership's profit are all left out.

• Being under the line this year doesn't mean you're safe. The line drops in 2027 and 2028.

If your qualifying income is £20,000 or less, you're exempt. There are also exemptions for some people who genuinely can't use digital tools, for example because of a disability, their age, or no internet access where they live or work. You have to apply, and being unfamiliar with software or not wanting the extra cost doesn't count.

What do you actually have to do, and when?

The tax year runs from 6 April to 5 April. For each one, you send four quarterly updates and then your final return. Here's the first year for anyone who started in April 2026:

What	Deadline
1st quarterly update	7 August 2026
2nd quarterly update	7 November 2026
3rd quarterly update	7 February 2027
4th quarterly update	7 May 2027
Final tax return for 2026-27	31 January 2028

The same four dates repeat each year (7 August, 7 November, 7 February and 7 May). Your 2025-26 return, the last one under the old system, is still due on 31 January 2027 and is sent the usual way.

The quarterly updates are short. You send HMRC your total income and total expenses for the three months, straight from your software. You don't work out any tax at that stage. If you spot a mistake later, you fix it in your software and it goes through with your next update.

You can use calendar quarters if you prefer. Instead of splitting the year from 6 April, you can choose quarters that end on the last day of June, September, December and March. The deadlines don't change, and it's easier to keep track of if your bookkeeping runs by calendar month.

You need software. HMRC doesn't provide any, so you need a product that works with Making Tax Digital. If you're happy with spreadsheets you can keep them, but you'll need extra "bridging" software to send the figures across. HMRC has a list of approved products on gov.uk.

What happens if you're late? In the first year (2026-27) there are no penalty points for late quarterly updates, but you still have to send them. HMRC wants them all in before your final return. From April 2027, you get a penalty point for each missed deadline. Four points means a £200 fine, and another £200 for every late one after that. Late payment of tax has its own penalties and interest, and those already apply.

What should you do now?

1. Work out your number. Open your latest tax return and add up your self-employment turnover and your property income, before expenses. That's your qualifying income. If it's over £50,000, you should already be in. If it's over £30,000, you start in April 2027. If it's over £20,000, you start in April 2028.

2. Sign up if it's your turn. You do it on gov.uk, or an accountant can do it for you. You need to be registered for self-assessment and to have filed a return in the last two years.

3. Get your software sorted early. Don't leave it until the week before a deadline. Pick something that suits how you work, connect your bank feed, and get used to it before it matters.

4. Start keeping your records up to date. Digital records need the amount, the date and the category for every bit of income and every expense. It's far easier to do that weekly than to rebuild three months of receipts on 6 November.

5. Put the dates in your diary. 7 August, 7 November, 7 February, 7 May, then 31 January.

If you're not in yet, the best time to get ready is before you have to. Start using software a year early and the first deadline will feel like any other day.

How can Llama help?

We look after sole traders and landlords across Cardiff and South Wales, and we'll make this the boring bit of your year.

• We work out if you're in and when you need to start.

• We get you signed up and set up on the right software.

• We keep your books up to date, so your quarterly updates are a few clicks, not a

  weekend of panic.

• We send your updates and your final return on time, and we tell you what tax is coming so there are no nasty surprises.

Both our sole trader packages, HERD Annual and HERD Intense, cover Making Tax Digital, so it's already taken care of. Have a look at our sole trader pricing, or just book a free call and we'll tell you where you stand. No Prob-Llama.

Sources we opened:

• GOV.UK: Sole traders and landlords earning more than £30,000 urged to act now: thresholds, start dates

• GOV.UK: Use Making Tax Digital for Income Tax: thresholds, records, quarterly deadlines, first-year penalty relief, software

• GOV.UK: Work out your qualifying income: what counts and what doesn't, jointly owned property

• GOV.UK: Find out if you can get an exemption: exemptions, £20,000 or less

• HMRC: MTD for Income Tax timeline: all deadlines to 2028

• BDO: Making Tax Digital for Income Tax: combined turnover, 2024-25 return, tax payment dates

• FreeAgent: MTD penalties and Xero: MTD penalties: points, £200 fine, first-year relief