Low Incomes Tax Reform Group: New HMRC figures show the scale of MTD challenge
New figures from HMRC suggest that around 216,000 unrepresented landlords and self-employed businesses will be legally required to sign up for the new Making Tax Digital for Income Tax (MTD) regime by April 2026.1 The Low Incomes Tax Reform Group (LITRG) is encouraging taxpayers to get ready.
Published earlier this week, HMRC figures show that an estimated 864,000 self-employed businesses and landlords are likely to be affected by MTD from April 2026. The figures suggest that around 216,000 of these taxpayers are ‘unrepresented’ – meaning they do not use the services of an accountant or tax adviser.
LITRG is concerned that some unrepresented taxpayers are still not aware of what MTD is, and what they need to do to comply with these new reporting requirements. The clock is now ticking for people to get ready for this major change.
From April 2026, MTD will apply to people who had more than £50,000 of gross income from self-employment and/or rental income in the 2024/25 tax year, unless they are exempt. Affected taxpayers will need to keep digital records, make quarterly reports to HMRC and, importantly, must have the appropriate commercial software to participate.
Victoria Todd, head of LITRG, said: “MTD represents the biggest change to income tax in a generation, and these new figures from HMRC provide a helpful indication of the number who will be affected in the coming years.
“The requirement to take part in MTD from April 2026 is based on a person’s 2024/25 tax return data. We are therefore urging taxpayers with self-employment and/or rental income to prepare and submit their tax returns for the year ended 5 April 2025 as soon as possible, so they are clear as to whether they will be legally required to participate in MTD from April 2026.
“HMRC’s figures also show that, of unrepresented taxpayers potentially within the scope of MTD next year, 79% did not use any commercial software to complete their 2023/24 tax returns. Using MTD compatible software from April 2026 will likely be a very big change for them. Even those who do currently use commercial software to complete their tax returns may well find they need different software to meet the MTD digital record keeping requirements. For some people, choosing software and learning to use it will be daunting and time-consuming.
“HMRC have confirmed that it will be possible for some people to apply for an exemption from MTD if they meet certain criteria, for example if they are digitally excluded. We are still awaiting confirmation from HMRC as to when this exemption service will launch.”