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    Tag: making tax digital for income tax

    First Making Tax Digital for Income Tax mandation letters issued by HMRC

    Posted on by Rebecca Campbell

    Sole traders and landlords who submitted their 2024/25 Self Assessment tax return by the end of August 2025 will soon receive the first notifications from HMRC, confirming that they must comply with Making Tax Digital (MTD) for Income Tax from April 2026.

    Who needs to comply with MTD for Income Tax?

    You’ll be required to join MTD for Income Tax from April 2026 if your 2024/25 tax return shows gross income from self-employment and/or property exceeding £50,000.

    HMRC will be sending out official mandation letters to those taxpayers to inform them that they must follow the new digital reporting rules.

    Understanding your responsibilities

    Even though HMRC is issuing mandation letters, it remains your responsibility to:

    • Check whether you fall within the scope of MTD for Income Tax from April 2026
    • Sign up for MTD for Income Tax when required

    If you believe you meet the criteria but haven’t received a letter, you should still register for MTD.
    If you’re unsure, our team of MTD experts can help you determine whether you fall under the requirements.

    When are the letters being sent?

    • November 2025: The first batch of mandation letters is now being issued to those who filed their 2024/25 tax return by 31 August 2025.
    • February–March 2026: HMRC will send letters to those who file their returns between September 2025 and January 2026.

    Towards the end of November 2025, HMRC will also send “prompt letters” to unrepresented taxpayers who haven’t yet filed their 2024/25 tax return. These letters act as a reminder of the upcoming April 2026 start date, based on information from 2023/24 tax returns.

    What the letters include

    Both mandation and prompt letters explain:

    • What’s required under MTD for Income Tax
    • Who needs to comply from April 2026
    • How to prepare and sign up

    Each letter also contains a QR code linking to further guidance and resources from HMRC.

    Get in touch

    If you fall under the scope of Making Tax Digital and aren’t sure where to start – or haven’t yet ensured you’ll be compliant from April 2026 – get in touch with our MTD experts.

    We’ll talk you through your options and next steps.
    📧 Email: enquiries@pmm.co.uk

    HMRC to reform Self Assessment penalty system

    Posted on by Rebecca Campbell

    From 2026, the current standard £100 fine for late filing of Self Assessment tax returns is due to be changed to a points-based system for self-employed individuals and landlords with a turnover above £50,000.

    HMRC have confirmed that the penalty system will be reformed in order to curb the abuse of the Self Assessment system and support taxpayers who genuinely make an occasional mistake.

    The proposed penalty reforms for paying tax late will be based on the length of time the tax is outstanding, meaning the earlier the overdue payment is made, the lower the penalty charge will be.

    The points-based system will be beneficial for those who only occasionally miss deadlines. For example, if an individual misses a self assessment deadline, they will initially be given one point, with a financial penalty only being charged once a set number of points has been reached. This approach recognises that taxpayers who infrequently miss deadlines should be encouraged to comply with filing obligations, rather than immediately being charged a penalty. Instead, the new penalty regime will penalise the minority who persistently miss filing and payment deadlines.

    Although the reforms already apply for VAT, following the government decision in December 2022 to give businesses more time to prepare for Making Tax Digital (MTD) for Income Tax, the changes are now due to come in from April 2026.

    Get in touch

    If you would like to discuss the Self Assessment penalty system changes in more detail, please speak to your usual PM+M adviser or email us at enquiries@pmm.co.uk.