From 6 April 2026, HMRC is introducing Making Tax Digital (MTD) for Income Tax which means landlords, freelancers and those who are self-employed will run their tax return online and will have to report in new ways.

Whether you are renting a chair in a salon, operating your own mobile business, or have your own salon, you will need to keep digital records of your income instead of submitting a Self Assessment.

What to expect from April 2026

From April 2026 only landlords and sole traders with a yearly income greater than £50,000 will be eligible for MTD, the scheme will then be gradually be expanded over time.

In April 2027, the threshold will include any income over £30,000 and it will be reduced further to include anyone making an income over £20,000 from April 2028.

Anyone earning below this income will still have to submit Self Assessment.

Once your yearly income qualifies for MTD, it is essential that you provide HMRC with quarterly updates on your income and expenses, as well as submit yearly tax returns and pay anything you owe.

MTD for Income Tax doesn’t change the rules of income tax. The rules around allowable expenses, personal tax allowances, National Insurance contributions, and so on, all remain the same.

What are the benefits of MTD vs my normal tax return? 

Salon owners and workers, as well as other freelancers, have busy lives so making things digital has the power to make things simpler. Not only will it enable you to track your taxes in real time, which gives you more chance of spotting slip ups, but HMRC is also introducing a more lenient point-based system for late payments.

A points-based system for late submissions means you will not get a financial penalty for the occasional mistake. New late payment penalties will be more proportionate to the amount of tax you owe, and how long it takes you to pay it.

The process will also be automated, provided you use HMRC-recognised accounting software, easing the strain on your business when it comes to paper work.

How can you access MTD software?

At the moment, MTD is voluntary. However, HMRC is conducting a testing programme for taxpayers to trial the scheme so that they can prepare for the changes and get ahead of the curve.

Let’s face it, implementing any new software into your business takes some ironing out so, if you are self-employed or own a property and would like to be involved in the testing process, visit this Government portal.

Equally, if you just want to find out more about the scheme, you can sign up for HMRC’s videos and webinars which are designed to provide all the essentials on MTD.