Huge HMRC rule change begins in days but 'most people aren't ready'
April 6, 2026, is the date it starts and it will affect more people in the next couple of years as well
A new UK poll of businesses reveals that the vast majority - 94 percent - are unprepared for Making Tax Digital (MTD), which is being introduced from April 6, 2026. Firms were responding to the survey carried out by accountancy and business advisory firm Azets.
The new HMRC system means people and businesses who do their own tax returns will need to do quarterly updates throughout the year before a final declaration, rather than a single calculation at the end of the year.
Fraser Campbell, UK head of Accounts and Business Advisory Services (ABAS) at Azets, said: "The online poll showed overwhelmingly that the majority of businesses are simply not ready for MTD. I was alarmed that more than 63 percent of respondents were not prepared at all, while another 31 percent have simply 'started preparing'.
"Less than six per cent reported that they were ready for the introduction of MTD, which is worrying given that it is the most significant overhaul of the tax system since the introduction of self-assessment 29 years ago. Time is of the essence.
"We urge all businesses affected to put plans in place to deal with this shift to ensure a smooth and compliant transition.
"Perhaps the biggest change is the need to keep digital records, use MTD-compatible software and submit updates every quarter, as well as a final declaration."
Making Tax Digital explained
Landlords, sole traders and the self-employed with gross income above £50,000 per year will have to comply with a new Making Tax Digital (MTD) regime from next month.
The threshold lowers to those bringing in more than £30,000 in April 2027, followed by those with an income of more than £20,000 in April 2028.
The tax system is moving closer to real-time with the upcoming changes impacting 864,000 individuals and landlords across the country - with figures expected to rise to 2.9m within three years as income thresholds are reduced.
Another survey question, which asked about the biggest concerns surrounding MTD for income tax, saw more than 37 percent of participants citing understanding what needed to be reported, 25 percent specifying knowing what was required to comply and more than 21 percent pointing to selecting the appropriate software.
Fraser added: "While MTD will mean changes in processes and software that are compliant with MTD, the switch will also bring advantages for individuals with access to near real-time information and insight about their businesses, cash flow, income and taxes for the first time.
"Getting the right advice from the right people will help those who are in scope of it be ready and confident for its introduction – whether they're affected by the changes this April, or in the years that follow."
Azets is a specialist business advisor to SMEs and offers a dedicated MTD portal for advice.
