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The Money Saving Experthas warned Brits of a new HMRC tax law change. Sole traders and landlords earning more than £50,000 from self-employment and property will now have to use Making Tax Digital (MTD) for Income Tax.

From April 6, 2026, those eligible will need to use recognised software to keep digital records and send HM Revenue and Customs (HMRC) light-touch quarterly updates of their income and expenses. It's important to be aware these are not extra tax returns.

HMRC is providing a range of free support to help people prepare, including online guidance, webinars and videos. Free software options are available and once income and expenses are recorded, the software generates a simple summary to send to HMRC.

At the end of a tax year on April 5, those within MTD for Income Tax will still need to file a tax return by the following January 31 - but the software will already hold the information from the quarterly updates, meaning no last-minute hunt for records or receipts.

Martin Lewis has said that self-employed Brits should start putting aside 30% of their income. His website, MoneySavingExpert.com, said: "So Martin's rule of thumb is for every £100 you're paid, put about £30 aside in a separate account you never touch, for tax and NI (hopefully this is too high, in which case you'll have saved a touch)"

Thousands of sole traders and landlords have already signed up for MTD for Income Tax, with more than 12,000 quarterly updates successfully submitted through a voluntary testing programme.

Those joining MTD in this month 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.

To support the transition, the Government has announced that customers joining MTD for Income Tax in April will not receive penalty points for late quarterly updates for the first 12 months.

Under the new system, penalty points will be given for each late submission, with a £200 penalty only applied once four points are reached. This means occasional slip-ups won't result in immediate fines.

HMRC is urging those in scope of MTD for Income Tax to act now: read the guidance, choose software and sign up on GOV.UK. Those who use a tax agent should speak to them about preparing.