London and South East set to bear brunt of HMRC’s Making Tax Digital rollout across UK taxi drivers and sole traders
- Perry Richardson
- Mar 22
- 2 min read
London and the South East are expected to see the greatest impact from upcoming Making Tax Digital (MTD) reforms, with new figures highlighting a strong regional concentration of higher-earning sole traders and landlords required to comply from April 2026.
HM Revenue and Customs (HMRC) data indicates that around 167,000 individuals in London alone fall within scope of the new rules, followed by 142,000 in the South East and 95,000 in the East of England. These regions collectively account for a significant proportion of the UK’s self-employed population earning above the £50,000 threshold.
The changes will require affected individuals, including many taxi and private hire drivers operating as sole traders, to adopt digital record-keeping and submit quarterly income updates using compatible software. For drivers working in high-demand urban markets such as London, where annual earnings are more likely to exceed the threshold, the compliance burden is expected to be more widely felt.
Beyond the capital and surrounding areas, the South West accounts for 83,000 affected individuals, while the North West and West Midlands follow with 68,000 and 60,000 respectively. Yorkshire and the Humber and the East Midlands report similar figures at 55,000 and 53,000.
Regional breakdown shows highest concentration of affected earners in London and southern England ahead of April 2026 tax changes
Scotland, previously highlighted as having around 51,000 affected taxpayers, sits mid-table in the UK-wide distribution. Wales and Northern Ireland show lower volumes at 34,000 and 27,000 respectively, with the North East recording the smallest affected population at 22,000.
For the taxi and private hire sector, the regional disparity reflects broader earning patterns and operational density. Drivers in major metropolitan areas, particularly London, are more likely to cross the £50,000 revenue threshold due to higher passenger demand, longer working hours and elevated fare structures. As a result, adoption of MTD software is expected to be more concentrated in these areas.
In the taxi industry there are raised concerns about the administrative shift, particularly for drivers who traditionally manage finances annually through Self Assessment. The move to quarterly reporting introduces a more continuous compliance cycle, requiring regular bookkeeping and familiarity with digital tools.
HMRC has positioned the reform as a modernisation of the tax system, aimed at improving accuracy and reducing end-of-year pressure. However, for many sole traders, including those in the taxi trade, the immediate challenge lies in adapting systems and processes within a limited timeframe before the April 2026 deadline.
