Those earning over £20,000 from certain income sources will have to make a change by the deadline, HMRC says.
HMRC is issuing correspondence about tax changes (Image: Getty)
HMRC is sending emails warning people that they must sign up to a new service to pay tax if they earn over £20,000.
The tax office is urging people who are either self-employed or earn money from property to sign up to its new Making Tax Digital (MTD) service for income tax.
HMRC is warning people they will be ‘legally required’ to use the service to pay tax from a certain date, depending on how much you earn.
The new system is phasing in over the next three years depending on how much income you have.
If you earnt over £50,000 of ‘qualifying income’ from property or self employment in the tax year 2024-2025, you must sign up to and use the MTD service from April 2026.
If you earn over £30,000 between 2025 and 2026, you must sign up from April 2027.
And if you earn over £20,000 between 2026 and 2027, you must sign up from April 2028.
HMRC said in an email seen by the Express: “Dear customer, If you receive qualifying income from self-employment and/or property, you’ll be legally required to use Making Tax Digital for income tax (MTD) – based on the level of qualifying income – from the following dates:
• April 2026, if your qualifying income is over £50,000 in the 2024 to 2025 tax year
• April 2027, if your qualifying income is over £30,000 in the 2025 to 2026 tax year
• April 2028, if your qualifying income is over £20,000 in the 2026 to 2027 tax year (the government has set out plans to introduce legislation to lower the qualifying income threshold to this level)
The tax office is also warning people that the new service will also include ‘updated penalties’ for late submissions and payments.
It added: “HMRC began contacting agents, businesses, and landlords about these changes from April 2025. Once you start using MTD for Income Tax, new rules around late submissions and payments will apply – including updated penalties.”
There are, however, certain groups that won’t be required to use MTD.
The government explains via gov.uk: “The government believes there are some taxpayer groups who will face disproportionate barriers to operating MTD and should be exempt.
“The following groups will not be required to use MTD for income tax, (subject to notifying and satisfying HMRC that they are exempt):
- customers who have a Power of Attorney
- non-UK resident foreign entertainers and sportspeople who have no other income sources that count as qualifying income for MTD
- customers for whom HMRC cannot provide a digital service.”
