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HMRC has emailed an alert to some people earning more than £50,000 as a major tax system update comes into play. The Government stressed that Making Tax Digital now applies to anyone who earned at least £50,000 from self-employment or property in the 2024/25 tax year.

Separate from the year-end tax return, MTD requires earners to file quarterly digital records of income and expenses to HMRC. The Government said it will make it easier to file year-end taxes because the software will have stored information from the quarterly updates, so there's no last-minute hunt for records or receipts.

The email, sent to those registered for self-assessment, stressed that people who receive the "qualifying income" will be legally required to use MTD for Income Tax in the upcoming years, based on their levels of earnings.

It will be carried out in a tiered approach. This year, sole traders and landlords earning more than £50,000 through self-employment and property will have to sign up.

In April 2027, the threshold will drop to those who earned £30,000 for the 2025/26 tax year, and in April 2028, it will become £20,000, subject to legislative approval.

HMRC urged those impacted to read the guidance, watch webinars and sign up on GOV.UK to get prepared for the changes. Those who genuinely cannot use digital tools can apply for an exemption.

The Government has launched different webinars to help people understand MTD, including one for landlords, and one for business owners. Sole traders or landlords without an accountant or bookkeeper can register for this webinar.

It said the sessions would explain who will be affected and when, how to make informed software choices, requirements for Income Tax, and how to inform your tax agent, if applicable.

Craig Ogilvie, HMRC's Director of Making Tax Digital, previously said the system is "straightforward and helps reduce errors".

"Thousands of volunteers have already used it successfully. This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax," he added.

A £200 penalty will be issued for repeated late submissions. Penalty points are issued for every late submission, and the fine is triggered once a person receives four. HMRC said this will prevent immediate fines for occasional slip-ups.

The Government said that to support the transition, it will not issue penalty points for the first 12 months, for customers joining MTD for Income Tax in April 2026.

Those joining MTD in April 2026 will still file their tax return for the 2025 to 2026 tax year in the usual way by January 31, 2027, as this covers the period before MTD begins. The first MTD tax return, covering the 2026 to 2027 tax year, will be due by January 31, 2028.