HMRC alert as major change to tax system looms in 2026 | Personal Finance | Finance

Certain workers have less than three months before a major tax change starts. The new Making Tax Digital (MTD) for Income Tax system is set to come into effect on April 6 this year.

While three months might seem distant, HMRC is encouraging taxpayers to act now by enrolling in the trial scheme. HMRC stated: “It will give you the chance to get comfortable with the new system before it becomes mandatory and access to our dedicated support team – essentially a safety net while you learn the ropes.”

The tax authority is eager to clarify that this transition will not mean additional tax returns for anyone.

HMRC explained: “The required quarterly updates are simple summaries that your software generates automatically. Think of it as digital bookkeeping that talks to HMRC four times a year, rather than cramming everything into January for your Self Assessment return.

“If you spot an error, you can fix it in the next update. More than 2,000 updates have been successfully submitted in the testing programme and the feedback from those involved has been encouragingly positive.”

HMRC has also noted that whilst compatible software is necessary, there are both complimentary and paid-for options on the market. The revenue authority continued: “There isn’t a one size fits all – the key is finding which software works for your business. The software will give you real-time estimates of your tax bill throughout the year, helping with cash flow planning and avoiding nasty January surprises.

“If you’re already using spreadsheets or accounting software, you can get compatible software that connects to your existing records and meets the new requirements.”

Making Tax Digital director Craig Ogilvie commented: “Tax is changing and with just six months until Making Tax Digital for Income Tax comes into effect, now’s the time to start preparing.

“MTD is about spreading your tax admin throughout the year instead of that January scramble to complete your Self Assessment return.

“There are free software options available, and early feedback from our testing participants shows the system is straightforward once you are familiar with it.”

HMRC projects that approximately 780,000 self-employed workers and property owners will need to adopt MTD for Income Tax from April 2026, with an additional 970,000 following suit from April 2027.

Registration for the pilot scheme is available via GOV.UK.