CHOOSING YOUR SOFTWARE: Clock ticking for taxi drivers forced to comply with new HMRC Making Tax Digital rules in April 2026
- Perry Richardson
- 14 hours ago
- 2 min read
From 6 April 2026, thousands of self-employed workers, including taxi drivers, will have to comply with new Making Tax Digital (MTD) rules for Income Tax.
The government has confirmed that sole traders and landlords bringing in more than £50,000 in revenue will need to keep digital records and submit updates through MTD-compatible software. Those taking between £30,000 and £50,000 will follow in April 2027, with a decision on those under £30,000 still pending.
For taxi drivers, this means that paper logbooks or manual spreadsheets will no longer be enough to meet HMRC’s requirements. Instead, digital records of income and expenses will need to be created, stored and submitted using approved software.
Drivers must send quarterly updates of their income and costs to HMRC through this software, followed by a final return by 31 January after the end of the tax year.
There are two main types of software available. The first is full accounting software, which creates digital records and often links directly to bank accounts or allows drivers to scan receipts and invoices. This type can handle both quarterly updates and the final tax return.
The second option is bridging software. This is designed for those who prefer to keep using spreadsheets or existing systems. The bridging tool connects records to HMRC and submits the required updates.
Some drivers may prefer one package that does everything. Others might use more than one product, such as one tool for creating records and another for sending submissions. Agents can also file on behalf of drivers, provided the chosen software allows multiple users.
When selecting a product, drivers will need to ensure it supports all their income sources, whether from taxi work, rental property or other earnings. Pricing should also be considered, with some free versions offering limited features.
Importantly, HMRC does not endorse individual products but has a recognised list of approved providers. Drivers can use the Government’s software finder tool to check which packages meet their needs and confirm if their current accounting system is compatible.
With just months left until the first stage comes into force, taxi drivers are being urged to prepare now. Choosing the right digital tools now will avoid last-minute problems and potential penalties when the rules take effect.
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