St James Place warns self-employed to act now as digital tax deadline looms
Financial giant urges landlords and sole traders to prepare for new digital filing rules amid slow national take-up.
St James’s Place has urged hundreds of thousands of sole traders and landlords to prepare now for the rollout of Making Tax Digital (MTD) for income tax, warning that leaving it too late could risk fines and confusion when the new regime begins next April.
The first phase of HMRC’s long-delayed digital tax overhaul will come into effect on 6 April 2026, requiring those earning more than £50,000 to keep digital records and submit quarterly updates through accredited software.
According to government estimates, the changes will affect nearly 864,000 people across the UK.
Alexandra Loydon, group advice director at St. James’s Place, said the next six months would be “critical” for those yet to make the switch. “For anyone still keeping paper records, now is the moment to move”, she said, adding that “starting early will make adapting to the new system far easier and help avoid penalties later”.
HMRC has confirmed that it will not provide its own software, leaving taxpayers to find compatible digital tools or work with accountants.
Late filings will trigger a points-based penalty system, with repeated breaches leading to fines of £200 or more and escalating interest charges for unpaid balances.
Slow adoption raises concern
Despite years of development, HMRC’s own figures suggest momentum behind MTD remains limited.
Fewer than 2,500 users have joined its testing programme so far, representing just 0.34 per cent of those due to be affected next year.
Craig Ogilvie, HMRC’s director of MTD, has urged accountants and agents to review their client lists immediately: “With April 2026 on the horizon, those who meet the criteria should join our testing programme now to help shape the final service”, he said.
Industry groups have raised concerns over the pace of adoption and rising compliance costs. The Federation of Small Businesses (FSB) warned that a ‘sizable minority’ of firms still rely on paper bookkeeping, while many landlords remain unaware of the incoming rules.
An Accountex survey found that one in three accountants do not feel prepared for the changes, and 82 per cent expect MTD to be their single biggest challenge in the year ahead.
Yet a similar share also view it as a potential opportunity to modernise their practices.
For those unable to file digitally, HMRC has opened an exemption process for individuals deemed ‘digitally excluded’, including those without internet access or with health or religious barriers to online filing.
Yet, the department has clarified that lack of knowledge or cost concerns alone will not qualify for exemption.