HMRC warn more than 860,000 taxi drivers and sole traders face digital tax reporting deadline from April
- Perry Richardson
- 21 minutes ago
- 3 min read
More than 860,000 taxi drivers, private hire operators, sole traders and landlords turning over over £50,000 a year are being told they must begin using digital tax reporting from 6 April 2026, as the government presses ahead with the next phase of Making Tax Digital for Income Tax.
Under the changes, affected taxpayers will be required to keep digital records and submit quarterly summaries of income and expenses to HM Revenue and Customs using approved software. The first quarterly update will be due by 7 August 2026, covering the period from April to July.
HMRC said the quarterly submissions are not additional tax returns but “light-touch” updates designed to spread reporting across the year. A traditional end-of-year Self Assessment return will still be required, although much of the information will already be held within the software through the quarterly updates.
Taxi drivers and other sole traders operating above the £50,000 threshold in the 2024 to 2025 tax year will be the first group brought into the system. HMRC has urged those in scope to begin preparing now, warning that there are less than two months remaining before the rules take effect.
First quarterly submissions under Making Tax Digital for Income Tax will be due in August 2026
The department said thousands of people have already joined a voluntary testing programme, with more than 12,000 quarterly updates successfully submitted to date. Officials argue this demonstrates that the system is functioning and that free software options are available for those with straightforward affairs.
HMRC confirmed that individuals joining Making Tax Digital in April 2026 will not receive penalty points for late quarterly submissions during their first 12 months in the system. After that period, late updates will attract penalty points, with a £200 fine only applied once four points have been accumulated.
Despite the move to digital reporting, those entering the scheme in April 2026 will still submit their 2025 to 2026 Self Assessment tax return in the usual way by 31 January 2027, as that year falls outside the new regime. The first Self Assessment return fully under Making Tax Digital, covering the 2026 to 2027 tax year, will not be due until January 2028.
HMRC said exemptions will remain in place for those who are genuinely unable to use digital tools, although taxpayers must apply and meet strict criteria. Guidance, webinars and sign-up information are available via GOV.UK, and those using accountants or tax agents are being advised to speak to them now about readiness.
The rollout of Making Tax Digital for Income Tax will continue in stages, with the income threshold reducing to £30,000 from April 2027 and £20,000 from April 2028, significantly expanding the number of self-employed workers and landlords required to comply.
Craig Ogilvie, HMRC's Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.
“This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.
"Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.”
