Subbies who earn more than £50,000 should get ready for a significant change in the way they report their earnings to HMRC. From next April, sole traders will be required to use Making Tax Digital (MTD) for Income Tax in the biggest shake-up to the self-assessment regime since it was introduced nearly 30 years ago. 

This means subbies with qualifying income of £50,000 and above must keep digital records, use MTD-compatible software and submit quarterly summaries of their income and expenses to HMRC. This is defined as gross income from self-employment before any tax allowances or expenses are deducted. 

The penalty system will hit taxpayers who make late filings and payments with fines based on points thresholds and outstanding sums owed. 

HMRC said the quarterly updates will spread the workload more evenly, bring the tax system closer to real-time reporting and help businesses stay on top of their finances and avoid the last-minute rush. The Treasury added: “By modernising how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share.”

HMRC estimates that 780,000 self-employed individuals and landlords will be required to use MTD for Income Tax from April 2026, with a further 970,000 joining from April 2027. 

Hudson’s managing director Ian Anfield said: “The change will inevitably lead to a significant increase in workload for subbies, their spouses and their accountants who currently submit their self-assessments for them. 

“We’re speaking to accountancy firms we work with and assessing various software providers so we can recommend trustworthy, legitimate and efficient services. Without a doubt, there will be some accountancy firms and bookkeepers which will see this as an opportunity to overcharge their clients.

“We will be sending further information to our clients in due course.”