Freelancers face tax shock as “Making Tax Digital” rollout looms, but sign-ups remain worryingly low
The UK’s four million freelancers could be heading for a tax administration shock as HMRC prepares to roll out Making Tax Digital (MTD) for Income Tax in April 2026, despite growing evidence that awareness and early adoption remain extremely low. This is according to Malt, Europe’s leading freelance management platform.
From April 2026, freelancers and sole traders earning over £50,000 will be required to keep digital records and submit quarterly tax updates using approved software, replacing the current system of filing one annual self-assessment return. The policy will extend further in April 2027 to those earning over £30,000, dramatically widening the number of self-employed workers affected.
Vincent Huguet, CEO and co-founder of Malt, said: “Making Tax Digital represents the biggest change to freelance taxation in a generation. Yet many freelancers remain unaware of the looming deadline and, according to some reports, only 5% (of those required to do so) have registered. Without better preparation, there is a real risk that thousands could be caught off guard when the rules change.”
He added that while digital tools can ultimately help freelancers manage finances more effectively, the transition must be handled carefully. “Freelancers already manage multiple clients, projects and income streams. Moving from one annual tax return to quarterly reporting fundamentally changes how they run their business. The priority now must be making sure the self-employed have the information, tools and support they need to adapt.”
To help freelancers Malt has launched its own Freelance Take-home calculator, a simulator that helps evaluate earnings for different employment statuses. Beyond pay, it also considers aspects like asset separation, business flexibility, IR35, and other income/investment strategies.
Despite the scale of the change, financial experts are warning that many freelancers remain unaware of the new system or unprepared for its requirements, raising concerns about a chaotic transition.
Making Tax Digital is the UK government’s long-running programme to modernise the tax system by moving reporting fully online and reducing the tax gap. But for freelancers, the reform represents a fundamental change in how they manage their finances.
Instead of one annual submission, self-employed workers will need to maintain digital records and submit at least four quarterly updates plus a final declaration each year, increasing the number of tax reporting touchpoints five-fold.
Critics say this could significantly increase administrative pressure on freelancers, many of whom already juggle multiple clients and irregular income.
The requirement to use third-party accounting software means additional costs and reliance on commercial platforms, which could potentially add hundreds of pounds per year, per freelancer, in compliance expenses.
Huguet continued: “Although HMRC has launched voluntary pilot programmes to allow taxpayers to prepare early, participation remains limited and eligibility restrictions mean many freelancers cannot yet test the system.
“The stakes are high: around 780,000 freelancers will be required to comply from April 2026, with nearly another million joining a year later as thresholds drop. As the 2026 launch approaches, the key question remains: are Britain’s freelancers ready for the digital tax era, or heading toward a compliance crunch?”