What’s changing
From 6 April 2026, sole traders and landlords in the UK whose income from self-employment or property exceeds £50,000 in the 2024-25 tax year must:
- Keep digital records using HMRC-recognised software. (gov.uk)
- Submit light-touch quarterly updates of income and expenses to HMRC. (gov.uk)
- File a full Self Assessment return by 31 January 2028 for the year 2026-27. (gov.uk)
Penalties & Support
- A points-based penalty system will apply for late quarterly updates: a £200 penalty only when four points are accumulated. Occasional lapses won’t immediately lead to fines. (gov.uk)
- HMRC encourages those affected to read the guidance, choose software early, and sign up now. Agents should get involved where clients use them. (gov.uk)
Practical Steps to Be Ready
- Assess if you're in scope. If in 2024-25 you earned £50,000+, you're required; thresholds lower in coming years. (gov.uk)
- Choose recognized digital software. Must meet HMRC’s functional-specs. Early adopters smartly test now.
- Organize your financial documents. Get habits in place for quarterly reporting: invoices, receipts, expenses.
- Talk to your tax agent (if applicable). They may need to update processes to submit updates on your behalf.
- Understand penalty structure. Four late updates = penalty; better to miss an update than multiple without catch-ups.
Why this matters
- Spread out admin: Quarterly updates avoid crunch time at year-end.
- Time to adjust. First year (2026-27) allows some cushion regarding penalties, helping with transition.
- Digital discipline pays off: more accurate records reduce mistakes, audits, or penalties.
Case Example
Sarah is a landlord earning £60,000 a year from her properties. Under the old regime she only completed annual returns. As of 6 April 2026, she must start sending her income/expenses every quarter using compatible software. If she misses two updates, she’ll earn points—getting to four points leads to a £200 fine. By organising now, Sarah avoids that risk.
Bottom line: If you’re a sole trader or landlord with income above £50,000, you must act before 6 April 2026—pick software, set up processes, and stay informed.