Major Changes Coming in 2026: Making Tax Digital for Income Tax

From 6 April 2026, the UK government is rolling out a significant transformation in how self-employed individuals and landlords report their income tax. Known as Making Tax Digital for Income Tax (MTD), this initiative is part of HMRC’s broader plan to modernise the tax system and improve accuracy, efficiency, and compliance.

Who Will Be Affected?

In the first phase (from April 2026), sole traders and landlords with a total annual turnover over £50,000 will be required to comply with MTD . This threshold includes combined income from self-employment and property. Partnership income is not included.

From April 2027, sole traders and landlords with a total annual turnover of over £30,000 will be required to comply with MTD and from April 2028 this threshold is further reduced to £20,000.

What Will Change?

Under MTD for ITSA, affected taxpayers will need to:

• Keep digital records of income and expenses using MTD-compatible software.
• Submit quarterly updates to HMRC summarising their income and expenses.
• Submit tax return at the end of the tax year to finalise their tax position.

This shift aims to bring tax reporting closer to real-time, reducing errors and helping taxpayers stay on top of their obligations throughout the year.

Why Is This Happening?

HMRC sees MTD as a cornerstone of its strategy to create a more modern, digital tax system. The goals include:

• Reducing tax errors caused by manual record-keeping.
• Saving time for businesses by spreading the workload across the year.
• Improving financial planning with more frequent updates and clearer visibility of tax liabilities.

How to Prepare

HMRC is encouraging eligible taxpayers to sign up for the MTD testing programme now, giving them time to familiarise themselves with the new system and software. Accountants and agents can also register clients early to ensure a smooth transition.

To get ready, individuals should:

• Choose MTD-compatible software (many options are available, including free versions).
• Start keeping digital records of income and expenses.
• Understand the new reporting schedule and deadlines.

What’s Changing at Companies House: A New Era of Corporate Transparency

The UK’s corporate landscape is undergoing its most significant transformation in over a century. As part of the Economic Crime and Corporate Transparency Act, Companies House is implementing sweeping reforms aimed at improving transparency, tackling economic crime, and enhancing the integrity of the company register.

There are new responsibilities for:

• all new and existing company directors
• people with significant control of a company (PSCs)
• anyone who files on behalf of a company

Key Changes

Mandatory Use of Authorised Corporate Service Providers (ACSPs)

Authorised Corporate Service Providers (ACSPs) are individuals or organisations that undertake anti-money laundering (AML) supervised activity such as:

• company formation agents
• solicitors
• accountants
• chartered secretaries and governance professionals
• These providers must meet anti-money laundering (AML) supervision standards and will be responsible for identity verification of individuals involved in company formation and management. From 18 November 2025 the identify of all directors will need to be verified before any fillings can be made.

This ensures a higher standard of due diligence and accountability in corporate filings.

Enhanced Transparency of Company Ownership

Companies will be required to:

Provide more detailed shareholder information.
Comply with stricter rules on corporate directors—only UK-registered entities with legal personality will be allowed to act as corporate directors, and the use of overseas companies in this role will be prohibited.

These measures are designed to make it harder to obscure the true ownership and control of UK companies.

Digital-Only Filing and Accounts Reform

Companies House is moving towards a fully digital filing system.

• Most accounts and filings will need to be submitted via software only (from 1 April 2027).
• Small companies will see changes in their accounts filing options, with a focus on simplification and consistency. From 1 April 2027, small companies will be required to file a copy of the balance sheet, directors’ report and profit and loss account. The profit and loss account will therefore be available on the public record.

This shift supports faster processing, better data quality, and reduced administrative burden.

Preparing for the changes

Businesses, accountants, and service providers should begin preparing now by:

• Reviewing their current filing processes.
• Ensuring they or their agents are registered as ACSPs.
• Updating internal systems to support digital-only submissions.
• Verifying that all company ownership and director information is accurate and compliant.