Crucially, the £50,000 threshold applies to gross income before any expenses or tax deductions are taken into account.

Under the new regime, affected taxpayers will no longer have the option of using HMRC’s existing online system or submitting paper returns.

Instead, they must adopt compatible software to maintain digital records and submit updates to the tax authority every quarter, rather than filing a single annual return.

Those receiving these mandation letters cannot afford to disregard them, according to household tax specialist Robert King at Nannywage Ltd.

“If you receive a mandation letter, HMRC expects you to take action because you will not be automatically registered for Making Tax Digital,” he said. “You need to choose compatible software and sign up in time for 6 April 2026, otherwise you risk falling behind before the new system even begins.”

Mr King also cautioned that accountants, bookkeepers and other advisers are not being sent copies of these notifications, meaning recipients must pass the information on themselves.

Those who have not yet received correspondence should not assume they are exempt.

“HMRC has made clear that it is the taxpayer’s responsibility to check whether their qualifying income exceeds £50,000 and to register if required,” Mr King added.

One particular challenge awaits those entering the new system next month: a period where both old and new reporting obligations will run concurrently.

“Anyone starting Making Tax Digital from 6 April 2026 will still need to file a traditional Self Assessment return for the 2025 to 2026 tax year by 31 January 2027, which means the old and new systems will briefly run side by side,” Mr King explained.

| GETTY

This creates a demanding situation for affected taxpayers, as quarterly digital submissions for the 2026 to 2027 tax year will commence before they have even completed their final traditional return.

“For self employed childcare professionals and landlords, that overlap is likely to be the most demanding part of the transition,” Mr King warned.

The penalty framework is also changing substantially for those within Making Tax Digital.

“Under the new late submission rules, a penalty point is issued each time a quarterly update or tax return deadline is missed, and once four points have built up a financial penalty is charged,” Mr King said.

| GETTY

However, the first year offers some breathing room. During 2026 to 2027, missed quarterly updates will not result in penalty points, though tax returns submitted after 31 January 2028 will still count towards the total.

From the 2027 to 2028 tax year onwards, both late quarterly submissions and overdue annual returns will trigger points.

Separately, failing to maintain proper digital records or breaking digital links within compatible software could result in penalties of up to £3,000 per failure.