Four Returns A Year, Whether You Like It Or Not

If you're self-employed and turn over more than £50,000, your tax life just got considerably more annoying. From 6 April 2026, Making Tax Digital for Income Tax is no longer voluntary. You must keep digital records, use HMRC-compatible software, and submit four quarterly updates plus a final declaration every year.

From April 2027 the threshold drops to £30,000. From April 2028, £20,000. By the end of this Parliament, this regime catches almost every plumber, electrician, hairdresser, freelance designer, and small landlord in the country.

And here's what you don't get in exchange: lower tax. The same money. Just paid through a more expensive process.

The Compliance Cost Is The Story

HMRC's own impact assessment estimated transitional costs north of a billion pounds for affected taxpayers, plus ongoing software subscriptions of between £150 and £400 a year per business. For a sole trader on £55,000, that's nearly a percentage point of revenue going to a piece of software they didn't ask for.

Labour is taxing the self-employed for the privilege of being taxed. The reform doesn't catch a single bit of tax that wasn't already owed. It just shifts the cost of administration from HMRC to the citizen — and from one annual return to four.

Who This Actually Hurts

Plumbers, sparkies, joiners, mobile hairdressers, photographers, music teachers, freelance writers, small-scale landlords. The exact category Labour spent the campaign claiming to champion. The 'wealth creators of the high street' — Reeves's own phrase — now have a new statutory obligation to log into approved software every twelve weeks.

Older sole traders who keep their books in a paper ledger and a shoebox of receipts are being told that twenty-five years of compliant filing isn't good enough anymore. Either subscribe to a cloud product or face penalties. There is no zero-cost path for the digitally cautious.

What Reform UK Would Do

Pause MTD for Income Tax pending a real cost-benefit review. The current threshold ladder catches tradespeople and pensioners with a single buy-to-let. If a tax change costs more to administer than it raises, it's not reform — it's overhead.

Reform would also raise the personal allowance to £20,000, taking nearly seven million people out of income tax altogether and removing them from the MTD net entirely. That's a tax cut and a paperwork cut in the same policy.

Labour has chosen to make the self-employed file four times more often. We'd let them get on with their work.