Many taxpayers who could be affected by upcoming changes to tax reporting are still unaware of what lies ahead. Communication challenges have historically made it difficult for taxpayers to stay informed, and with the introduction of Making Tax Digital (MTD), there is a risk that history could repeat itself.
Communication Challenges and Tax Changes
Communication has not always been a strong point for HM Revenue & Customs. While requests for tax returns are usually issued at the start of the tax year, communication in other areas can often be delayed.
According to performance statistics released in January 2026, HMRC faced significant communication challenges between January and November 2025:
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More than one in five pieces of correspondence did not receive a response within 15 working days.
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One in eight remained unanswered after 40 working days.
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The average time taken to answer phone calls exceeded 13 minutes, with more than one in ten calls being abandoned.
Lessons From Previous Tax Reforms
Poor communication has caused difficulties in the past. When the High Income Child Benefit Charge (HICBC) was introduced in 2013, many affected taxpayers were unaware of their obligations. It was not until September 2025 that HMRC introduced an online service allowing eligible individuals to pay the charge through PAYE, removing the need to complete a Self Assessment tax return.
This delay highlights how easily taxpayers can be caught out when major changes are introduced without clear or timely communication.
Who Will Be Affected First?
Initially, Making Tax Digital will apply to individuals who meet all three of the following criteria:
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They are registered for Self Assessment.
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They receive income from self-employment, property, or both.
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Their qualifying income exceeded £50,000 in the 2024/25 tax year (qualifying income generally means gross income from self-employment and property).
What Will You Need To Do?
If you meet these requirements, you will need to:
Register for Making Tax Digital
HMRC will not automatically enrol you, although reminder letters are expected to be issued.
Use Compatible Software
You will need to use HMRC-recognised software. If you currently rely on spreadsheets or existing software, you may need bridging software that connects your records with HMRC systems.
Submit Quarterly Updates
You will be required to send updates of your income and expenses to HMRC every quarter.
Submit an End-of-Year Return
An additional end-of-year submission must be completed by 31 January following the end of the tax year.
Transitional Penalty Changes
In the Autumn 2025 Budget, it was announced that taxpayers will not receive penalty points for late quarterly submissions during the 2026/27 tax year. This temporary relaxation suggests HMRC anticipates some challenges as the new system is introduced.
Lower Income Thresholds Are Coming
Even if your income is currently below £50,000, you may still be affected in the future. The qualifying income threshold is set to reduce:
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£30,000 from the 2027/28 tax year
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£20,000 in subsequent years
This means that a growing number of taxpayers will eventually fall within the scope of Making Tax Digital.
Preparing For The Changes
Making Tax Digital represents a significant shift in how income is reported and recorded. Early preparation can help reduce administrative burden, minimise errors and ensure you remain compliant as the new system is introduced.
If you are unsure whether Making Tax Digital will affect you, or you need support in preparing your reporting systems, professional guidance can help you navigate the changes with confidence.
The team at Chartwell Wealth Management can help you understand your obligations, implement suitable systems, and ensure your tax affairs remain organised and compliant. If you would like tailored advice based on your individual circumstances, we encourage you to get in touch with our advisers today.
Tax treatment varies according to individual circumstances and is subject to change.
The Financial Conduct Authority does not regulate tax advice.
