Compliance Essentials: Self Assessment & Making Tax Digital Obligations

What has changed?

• Making Tax Digital (MTD) for Income Tax Self Assessment became law in April 2026 for unincorporated individuals (sole traders and landlords) whose income exceeds £50,000. They now must keep digital records, submit quarterly updates, and file using software. (gov.uk)

• From April 2029, Self Assessment taxpayers who also have PAYE income will need to pay their Self Assessment tax liabilities through their PAYE code in-year, rather than waiting for the end of the year or self-assessment return, as proposed under the “Timely payments” consultation. (gov.uk)

• Filing deadlines and registration: For 2025-26 tax year, individuals new to Self Assessment must register by 5 October 2026, otherwise may face penalties. Return payment remains 31 January 2027. (gov.uk)

What obligations do taxpayers have now?

1. Sign up for MTD-compatible software if income crosses thresholds. Prepare to submit quarterly updates for income and expense, plus annual return via digital return. Exemptions or postponements may apply if digital use is unreasonable. (legislation.gov.uk)

2. Self Assessment registration: Anyone with a filing requirement must register by 5 October for 2025-26 tax year. Using the updated online service gets you a Unique Taxpayer Reference (UTR) within about 72 hours. (gov.uk)

3. PAYE and Self Assessment combined responsibilities: If you also have employment income, plan for the in-year collection through PAYE starting from April 2029. Ensure your tax code reflects your estimated self-assessment liability; update expectations with HMRC if your income or deductions change. (gov.uk)

Risk areas & penalties

• Missing registration by 5 October = automatic penalty unless HMRC satisfied there was reasonable excuse.
• Submitting late quarterly updates under MTD: for those joining from April 2026, there is a 12-month grace period (no penalty points) for late submissions; penalties (points culminating in fines) start thereafter. (gov.uk)
• Mis-forecasting income or failing to update HMRC when circumstances change may lead to under-payments & penalties.

Practical compliance steps

• As soon as your income crosses the threshold, get suitable accounting software, set up systems to track expenses & income, make quarterly updates.
• Register for Self Assessment in time; keep key documents (UTR, travel logs etc.) ready well before deadlines.
• Use HMRC tools and guides (for example, personal tax account, online calculators) to forecast your liabilities, especially if you have mixed income sources (employment + self-employment) to estimate what goes through PAYE post-2029.
• Seek professional help for more complex structures (multiple incomes, foreign income, trusts) to avoid traps in the new régime.