HMRC alert as £300 bill coming for sole traders and landlords | Personal Finance | Finance
Landlords and sole traders are being warned to prepare for a bill when major changes to the way thousands of people report their earnings come into force next year.
From April 6, 2026, anyone with total self-employment or property income over £50,000 will be required to comply with the Government’s Making Tax Digital (MTD) for Income Tax rules. The reforms will replace the traditional annual Self Assessment with quarterly digital submissions to HM Revenue & Customs (HMRC). The threshold will fall to £30,000 from April 2027 and again to £20,000 in 2028, eventually bringing nearly two million taxpayers into the system. The threshold is based on gross income, not profit.
George Holmes, managing director of Aurora Capital, said many self-employed workers will face new costs.
Mr Holmes said: “The Government says Making Tax Digital will modernise the tax system, but for [hundreds of thousands of] sole traders and landlords who need to comply from April next year, it’s shaping up to be a costly compliance exercise.
“Once you factor in paid-for software, setup time, training and ongoing admin, taxpayers could be looking at £300 to £500 a year just to stay on the right side of the rules. That’s a big ask for part-time landlords and side hustlers already dealing with rising costs and shrinking margins.
“It remains to be seen whether or not the promised efficiencies will offset these added costs.”
He added: “With the April 2026 deadline now less than eight months away, if HMRC wants this first roll-out to be a success, it needs to provide tangible support. Whether through free software options, better guidance or clear support for the digitally excluded. The risk is that those who can least afford it end up hit hardest.”
HMRC insists the reforms will improve accuracy and ease of use. Craig Ogilvie, director of Making Tax Digital at HMRC, said: “With April 2026 on the horizon, we are issuing letters to customers we believe will be mandated, outlining specific requirements and timelines.
“We urge those who meet the mandate criteria to join our testing programme on GOV.UK now to help shape the final service and make your transition smoother.”
MTD was first introduced for VAT-registered firms in 2019. An independent report later found that most businesses saw at least one benefit, including fewer mistakes in record-keeping.
The Treasury argues MTD for Income Tax will ultimately support both taxpayers and the wider economy. James Murray MP, Exchequer Secretary to the Treasury, said: “MTD for Income Tax is an essential part of our plan to transform the UK’s tax system into one that supports economic growth.
“By modernising how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share.”
Experts say those set to be affected should begin preparing now by adopting MTD-compatible software and considering HMRC’s voluntary testing programme.
People can find more information about how to sign up for the MTD testing programme here.
