MAKING TAX DIGITAL: Taxi association warns drivers taking over £50,000 face digital tax reporting from April 2026
- Perry Richardson
- 3 minutes ago
- 2 min read
Taxi drivers with self-employment revenue above £50,000 will be required to comply with Making Tax Digital for Income Tax from 6 April 2026, marking a significant shift in how earnings and expenses are recorded and reported to the tax authority.
Under the changes, affected drivers will no longer submit just a single annual Self Assessment return. Instead, they will be required to keep digital records using compatible software and send quarterly summaries of income and expenses to HM Revenue & Customs. An end-of-period statement and a final declaration will still be required after the end of the tax year to confirm totals and make any accounting adjustments.
Paul Brennan, Chairman of the Licensed Taxi Drivers’ Association, said the change represents a fundamental change to long-established practices for self-employed drivers. Writing in TAXI Newspaper, he said: “From 6th April 2026, if your gross self-employment income is over £50,000, you must use MTD for Income Tax. This means you must keep digital records with compatible software and send income and expense summaries every three months instead of one annual Self Assessment.”
The £50,000 threshold applies to gross income rather than profit, meaning drivers with high turnover but modest margins may still fall within scope. The requirement covers both hackney carriage and private hire drivers operating as sole traders, including those who complete their own tax returns rather than using an accountant.
Making Tax Digital for Income Tax will replace annual Self Assessment returns with quarterly submissions for higher-earning self-employed drivers
Brennan warned that the income threshold will reduce further in subsequent years, bringing a larger proportion of the trade into scope. “Thresholds will fall over time to £30,000 from April 2027 and £20,000 from April 2028,” he said. “If you haven’t already made plans then you need to either speak with your accountant who can best advise you or if you usually do it yourself, think about choosing and learning compatible accounting software sooner rather than later.”
To comply with MTD for Income Tax, drivers will need to record income and allowable expenses digitally as they arise, rather than relying on paper records or retrospective spreadsheets. Quarterly updates will be submitted to HMRC using approved software, providing an ongoing view of tax liabilities across the year. While these updates will not trigger tax payments each quarter, they are intended to reduce errors and spread reporting obligations more evenly.
HMRC has positioned MTD as part of a broader programme to modernise the tax system and improve accuracy. However, industry groups have raised concerns about additional administrative burden, software costs and digital exclusion, particularly among older drivers or those with limited IT skills.
Brennan urged drivers not to delay preparations, noting the limited lead-in time before April 2026. “We have three months to get ready and it would be a good idea to start keeping digital records from now to alleviate any stress later,” he said. For many drivers, this will mean adopting accounting software for the first time or changing long-standing working practices.
As the rollout progresses, taxi and private hire drivers are expected to be among the largest single groups affected by the expansion of MTD, making early engagement with the new requirements a priority for operators across the sector.
