Earning over £20,000 in the UK? HMRC’s new digital tax rules are coming for you in 2028
Key Points
- Making Tax Digital for Income Tax became mandatory in April 2026 for sole traders and landlords with qualifying income over £50,000
- The threshold drops to £30,000 in April 2027 and £20,000 in April 2028, pulling hundreds of thousands more people into the system
- 864,000 people already signed up must file their first quarterly update by 7 August 2026
- From the second year, each missed quarterly deadline earns a penalty point, and four points trigger a £200 fine
- Quarterly updates do not replace the Self Assessment tax return, which remains due by 31 January
Sole traders and landlords earning more than £20,000 a year will fall under HMRC’s Making Tax Digital rules from April 2028, as the tax authority steadily widens a system that already covers 864,000 people.
HMRC confirmed the rollout timetable as it reminded the first wave of taxpayers that their opening quarterly update falls due on 7 August. Making Tax Digital for Income Tax became a legal requirement in April 2026 for anyone with qualifying income above £50,000 from self-employment and property combined.
The threshold drops to £30,000 from April 2027 and to £20,000 from April 2028. That final step will capture part-time landlords, freelancers and side business owners who may not think of themselves as running a business at all.
What the rules require
Those in scope must keep digital records and send HMRC a summary of their income and expenses every three months through recognised software. The first update period runs from 6 April 2026 to 5 July 2026 for most people, with the submission deadline on 7 August 2026.
HMRC stresses that the quarterly update is not a tax return. It is a short summary of totals sent directly through software, and the tax authority says it takes minutes to complete. After each update, users can see an estimate of their tax bill for the year so far.
The annual Self Assessment tax return survives the change. Taxpayers must still file their return and pay any tax owed by 31 January 2027 for the current tax year.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, called the first deadline a landmark moment for the tax system. “Making Tax Digital is now a legal requirement and customers in scope should check now that they are signed up, that their software is compatible and submit their update before the deadline,” Ogilvie said.
Penalties
HMRC will not issue penalty points for late quarterly updates during the first year of the scheme. Penalties still apply for late Self Assessment returns and late payments.
From the second year onwards this changes. Each missed quarterly deadline earns one penalty point, and once a taxpayer accumulates four points, HMRC charges a £200 fixed penalty. Points expire after a period of compliance, and full details sit on GOV.UK.
Various exemptions exist, including for people who are digitally excluded. Taxpayers who use an accountant or agent can ask them to handle sign up and submissions on their behalf.
Early filers report a smooth process
Natasha Patterson, a 33 year old potter from Whitehead, County Antrim, submitted her first update weeks ahead of the deadline through Starling Bank’s compatible software. She said the submission itself took about 10 minutes because she had updated her records throughout the quarter.
“If you can complete your Self Assessment tax return, this is much easier. As far as tax submissions go, it was probably as pleasant as they come,” Patterson said.
She also pointed to the running tax forecast as the most useful feature. “It’s great to have a forecast of what I owe already, without mounds of paperwork. I feel more prepared knowing what’s expected of me in the coming months,” she said.
Some software packages include HMRC Assist, a digital support tool that gives tailored feedback to help users spot potential errors before submission, although taxpayers remain responsible for the accuracy of their figures.
