HB&O is encouraging landlords and sole traders not to get caught out by major new legislation that comes into force next year by making changes now.
Making Tax Digital for Income Tax is a government initiative designed to transform the tax system, modernising tax administration to make it more efficient and simpler for taxpayers.
The firm, which has offices in Coventry, Leamington and Birmingham, is urging taxpayers likely to be subject to the new legislation to make a head start by ensuring they know their requirements and to consider enrolling on HMRCs testing programme.
Under the new rules, which take effect from 6 April 2026, anyone who has generated more than £50,000 of income from self-employment, property or a combination of the two in the 2024/25 tax year will be legally required to keep digital records, submit digital quarterly updates, and submit their annual return through MTD compliant software, unless they are party to an exemption. Each quarterly update will amount to a summary of income and expenses, fed from the taxpayer’s digital records.
In April 2027, the income threshold will drop to £30,000, based on the entries on the 2025/26 tax return, and in April 2028 it will go down to £20,000, based on entries on the 2026/27 tax return. The new legislation will eventually affect millions of people across the UK in what is one of the largest tax system shake-ups for decades.
Holly Walker, Tax Senior at HB&O, said: “We are inviting some of our clients to enrol early on the test service, so that they can start to understand the new requirements right now. It’s really important that people learn about it early and understand how it works without the pressure of knowing it’s a legal obligation.
“Some clients already have a property income spreadsheet that they send to us to prepare their tax return. For these clients, transitioning to Making Tax Digital can be as simple as selecting a suitable bridging software to convert their existing spreadsheet into a compliant digital submission.
“However, it is going to be quite a big leap for clients who provide manual books and records late in the tax cycle. For these clients, conversations need to be taking place now.
“It’s going to have a big impact. Initially it might take more time and cost to get the systems and processes in place, but in the long run there will be benefits because you’ll be looking at figures in real time so if you wanted to make changes to your business the data will be more useful.”
Holly added: “We’d strongly recommend people get their tax information in early because the sooner we can prepare the 2024/25 tax return, the sooner we can confirm if they are within MTD from 6 April 2026 and start discussing the next steps.
“If you’ve not got the relevant system in place, you’re reluctant or you just don’t have the IT skills, we can have that conversation early to offer you the support and training that will guide you through and set you up for this change.”
For more information about the services HB&O offer, visit https://hboltd.co.uk/
