Don’t panic – that’s our message to subcontractors about Making Tax Digital for Income Tax. 

Under the new self-assessment rules, sole traders and landlords who earned more than £50,000 in the 2024-25 tax year must use HMRC-compatible software to report their income and expenses from April 2026. 

Hudson Contract has produced short video explainers with customer relationship associate Chelsea Turner (pictured) explaining the changes:

Under the new system, those with qualifying income will need to:

• Create, store and correct digital records of their self-employment and property income and expenses
• Send quarterly updates to HMRC
• Submit their tax return and pay tax due by January 31 the following year.

Ian Anfield, managing director, said: “Many clients have come to us asking how this affects their operatives and what support is available. At the same time, many subcontractors are worried about the cost and complexity of the new arrangements.

“The changes have caused some confusion in the market. Some accountants are advising tradespeople to set up as limited companies, which we wouldn’t recommend as it adds cost and complexity and could create IR35 issues. Other accountants are substantially increasing their fees in preparation.

“At Hudson, we have worked closely with our trusted accountancy partners to find the right solutions. We are teaming up with Grenfell James, a specialist accountancy firm with offices in London and Warwickshire, to offer a solution to subcontractors for as little as £10 plus VAT per month.

“The service is simple and easy to use with no disruption to existing arrangements. People simply photograph and submit receipts via a user-friendly mobile app to produce quarterly reports for HMRC. Users can keep their existing accountant or continue doing their own returns as normal.

“In our opinion, Making Tax Digital is a straightforward next step that can be easily managed by operatives, their partners, and bookkeepers.”

• Hudson has produced two short video explainers with Chelsea, one for subbies affected in the new tax year and the other for subbies likely to be unaffected, with links sent by text message to thousands of operatives.