Tax Digital update for high earners

HMRC will require quarterly updates under Making Tax Digital for Income Tax for people earning more than £50,000, affecting about 700,000 households.

HMRC imposes quarterly tax filings on earners above £50,000

HMRC will require quarterly updates under Making Tax Digital for Income Tax for people earning more than £50,000. The change moves filings from an annual cycle to a four times a year rhythm, starting in the 2026-27 tax year. The threshold captures self employed workers and landlords whose qualifying income crosses the line. HMRC says the plan will improve real time tax collection and reduce end of year errors, while pushing more taxpayers to keep digital records. About 700,000 households are expected to be affected.

The first quarterly return will cover income and expenses from 6 April to 5 July and is due on 7 August. Penalties are harsh: a £100 fine for late filing, rising to daily penalties of £10, up to £900, if the return remains outstanding for three months. After six months, a further charge of either £300 or 5% of the tax owed applies, with the same penalty at 12 months. If tax is unpaid, interest accrues on the amount due. The shift is a big change for people who used to handle everything in January; software and digital record keeping become essential to avoid a last minute rush.

The policy sits at the intersection of public finance and daily life. It signals a broader push to digitize tax collection, which could improve data quality and timeliness but also raises costs and learning curves for households and advisers. For some, the quarterly rhythm may be manageable; for others, especially those with limited software access, it could mean dedicated time and money to stay compliant. Public messaging will matter as much as policy design, because clarity on deadlines and penalties shapes uptake.

If HMRC can pair this reform with practical guidance and affordable digital tools, it could reduce end of year errors and improve revenue timing. Without that support, the change risks missed deadlines, penalties, and uneven adoption that could strain trust in a faster digital tax system.

Highlights

The clock is ticking for households to prepare for a new tax routine.