Major Changes Coming to the UK Tax System: Are You Ready?
- joanneslinger7
- Feb 26
- 2 min read
A significant transformation is coming to the tax system, yet many people are still unaware
of it.
The End of Traditional Tax Returns: A New Era for UK Taxpayers
Big changes are coming to the UK tax system. From April 2026, traditional self-assessment tax returns will start being phased out, affecting millions of self-employed individuals and landlords. Instead of submitting an annual tax return, taxpayers will be required to file quarterly updates using HMRC-compliant software.
HMRC is set to begin notifying the first 800,000 affected individuals from April this year, with another 970,000 following within a year. This marks a significant shift in how income is reported, streamlining the process but also introducing new compliance requirements.
So, what does this mean for you? Let’s break it down.
Why Is This Change Happening?
HMRC estimates that billions of pounds in tax revenue are lost annually due to errors or lack of reasonable care in completing tax returns. The new system aims to improve accuracy and ensure taxpayers are paying the correct amount.
For taxpayers, the benefits include:
Greater transparency – Ongoing tax calculations based on quarterly submissions
Improved financial planning – Real-time tracking of tax liabilities
However, the final tax calculation may still differ at year-end, particularly due to adjustments such as dividend income.
Who Is Affected?
All unincorporated businesses (sole traders)
Private landlords
How Is the Staging Date Decided?
Your staging date is determined by your total annual turnover (sales), not your profit or loss. This includes all income across multiple businesses and rental properties per taxpayer. If you run two businesses or have a business and rental income, your combined earnings will be considered.
What You Need to Do:
Maintain digital records of all income and expenses
Submit quarterly returns based on computerised records
Complete a final declaration on 31st January instead of filing a tax return
Register for Making Tax Digital (MTD) by 6th April 2026, with the first return due by 5th August 2026 (for those included in the first staging date)
Staging Dates for Implementation
Staging Date | Annual Turnover |
April 2026 | £50,000+ |
April 2027 | £30,000+ |
2029* | £20,000+ |
*Exact month for 2029 implementation is yet to be confirmed.
Will You Need to Pay Tax Earlier?
Currently, there are no proposed changes to tax payment deadlines. The key difference is in reporting frequency, not payment timing.
How Can You Prepare?
Ensure you are using MTD-compliant software for digital record-keeping and submissions
Review your accounting processes to ensure they align with the new requirements
Seek professional advice if you’re unsure how these changes will impact you
The transition to Making Tax Digital is one of the biggest changes to the UK tax system in years. Being proactive and preparing now will help you stay compliant and avoid any last-minute stress.
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