Compliance
Compliance Essentials: Self Assessment & Making Tax Digital Obligations
Navigate the coming obligations under the 2026-29 Self Assessment and MTD for Income Tax regime to avoid penalties and smooth compliance.
By NomadicTax Research Team • 5-8 min read • September 12, 2026
## 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](https://www.gov.uk/government/publications/hmrc-performance-update-april-to-june-2026/hmrc-performance-update-2026-to-2027-quarter-1?utm_source=openai))
- 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](https://www.gov.uk/government/publications/fiscal-events-2026-factsheets/timely-payments-in-income-tax-self-assessment-factsheet?utm_source=openai))
- **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](https://www.gov.uk/government/news/improved-self-assessment-registration-service-launched?utm_source=openai))
## 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](https://www.legislation.gov.uk/uksi/2026/336/pdfs/uksiem_20260336_en_001.pdf?utm_source=openai))
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](https://www.gov.uk/government/news/improved-self-assessment-registration-service-launched?utm_source=openai))
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](https://www.gov.uk/government/publications/fiscal-events-2026-factsheets/timely-payments-in-income-tax-self-assessment-factsheet?utm_source=openai))
## 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](https://www.gov.uk/government/news/act-now-864000-sole-traders-and-landlords-face-new-tax-rules-in-two-months?utm_source=openai))
- 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.