Compliance
Simplifying Tax Reporting for the Self-Employed: What You Need to Know
An overview of the UK's new tax reporting rules for self-employed individuals and small businesses.
By NomadicTax Research Team • 5 min read • November 13, 2025
## Introduction
In an effort to simplify tax reporting and reduce administrative burdens, the UK government has announced reforms to the tax system for self-employed individuals and small businesses. These changes aim to make it easier for businesses to file their tax returns and comply with tax obligations.
## Key Changes
### 1. Basis Period Reform
**What's Changed:**
- Businesses will be taxed on profits arising in a tax year, rather than profits of accounts ending in the tax year.
**Implications:**
- Aligns the taxation of self-employed profits with other forms of income, such as property and investment income.
- Reduces complexity and potential errors in tax returns.
**Actionable Advice:**
- Review your accounting periods and consider aligning them with the tax year to simplify reporting.
- Consult with a tax professional to understand how this change affects your specific circumstances.
### 2. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)
**What's Changed:**
- Introduction of a new MTD for ITSA threshold for customers with trading or property income over £20,000, effective from 6 April 2028.
**Implications:**
- Businesses and landlords with income above the threshold will be required to keep digital records and submit updates to HMRC using compatible software.
- Aims to reduce errors and make tax administration more efficient.
**Actionable Advice:**
- Start transitioning to digital record-keeping systems ahead of the mandatory implementation date.
- Explore MTD-compatible software options that suit your business needs.
## Conclusion
These reforms represent a significant shift towards a more streamlined and digital tax system. Early preparation and understanding of the changes will help self-employed individuals and small businesses adapt smoothly and remain compliant.
**Sources:**
- [Government announces simplified tax reporting for self-employed and small businesses](https://www.gov.uk/government/news/government-announces-simplified-tax-reporting-for-self-employed-and-small-businesses)
- [Spring Statement 2025: Policy Costings](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings)