As the tax landscape evolves, self-employed individuals need to stay informed about the latest changes. One significant shift is the expansion of Making Tax Digital (MTD) rules, set to take effect from April 6, 2026. In this blog post, we break down the key aspects in a professional yet straightforward manner.
Who’s Affected?
Sole traders operating self-employed businesses will fall under MTD’s purview if their gross income, including earnings from property, exceeds £50,000. This threshold is an aggregate of income from various sources, such as trade, profession, vocation, or property business.
It’s important to note that partners in general partnerships will be brought into MTD at a later date, which is yet to be announced. Meanwhile, business owners operating through limited companies or limited liability partnerships (LLPs) are currently excluded. They can expect a separate MTD commencement date tailored to their circumstances.
For those non-UK domiciled or non-UK resident, any foreign business income will not be subject to MTD.
What’s Excluded?
At present, directors of limited companies and members of LLPs are excluded from the current MTD requirements. However, a later start date will apply to bring them into compliance.
Registration Process
Details regarding the registration process will be provided by HMRC once they are clarified. Stay tuned for updates as we navigate through this transition.
Additional Changes for Self-Employed Sole Traders
In anticipation of MTD implementation, HMRC is reviewing the 'basis period’ rules for the self-employed. The goal is to simplify the taxation of profits from self-employment. This review is expected to impact sole traders whose accounting year end deviates from the standard 31st March or 5th April, and those with unused overlap profits within their business.