Nearly one million landlords and self-employed individuals, including those with “side hustles” or “lifestyle businesses”, are expected to need to file quarterly tax returns from 6 April 2026 under new HMRC regulations according to Price Bailey, the leading accountancy firm with offices throughout East Anglia.
Although the first quarterly update will not be due until 7 August 2026, the requirement to keep digital records in relevant software becomes mandatory from April 2026, giving taxpayers only a short window to get their digital record keeping systems in place. Many taxpayers are unlikely to be aware of their requirement to comply with new regulations until they file their current return, due 31st January 2026.
Price Bailey explains that Making Tax Digital (MTD) is a key part of HMRC’s initiative to modernise and simplify the UK tax system. By moving to digital record keeping and automated reporting, the government aims to reduce errors, improve accuracy and make tax administration more efficient.
Price Bailey warns that failure to comply may result in late submission penalties under a new MTD penalty regime being introduced as part of the regulations. MTD will be mandatory for individuals with total qualifying income of £50,000 or more in their 2024/25 tax return. The £50,000 threshold applies from April 2026, falling to £30,000 from April 2027.
Price Bailey says that getting ready for this takes around four to six weeks, so with the limited time available before the digital record keeping obligation starts it is important that taxpayers start to consider MTD as soon as possible.
Lee Sharman, Partner at Price Bailey, comments: “We continue to receive enquiries from individuals who believe they may fall within scope of MTD ITSA, but remain unclear about what is required of them.
“Some of the information available right now is confusing, and that lack of clarity is being made worse by the fact that the income thresholds being discussed relate to past tax years and have changed several times. Because the new MTD rules apply different thresholds in April 2026, April 2027 and April 2028, it’s understandable that people are confused about which threshold applies to them and when.”
He adds: “For many people this will be the first time they have had to maintain digital records in real time, rather than retrospectively calculating the figures at year end for the purposes of tax compliance. This represents a significant behavioural change but also can change the way that some businesses will operate on a day-to-day basis.
“For some taxpayers, where they don’t have visibility on the income levels of their businesses, they may not be aware they are above the income thresholds and caught by the new regulations. If they don’t submit their return until the 31st January then it limits the time they have to prepare, so I would encourage taxpayers to get their returns filed as soon as possible to avoid any surprises."
Price Bailey advises affected taxpayers to review their accounting software, update their record keeping processes and assess whether their current systems can support quarterly digital reporting.
