Two important changes are approaching that will affect many sole traders, landlords and small employers. Neither is optional, and both need a bit of forward planning to avoid stress, penalties or unexpected costs.
Making Tax Digital for Income Tax: who is affected and when?
HMRC continues to roll out Making Tax Digital for Income Tax (MTD for IT), and the first wave starts from 6 April 2026.
You will be brought into MTD for IT if:
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You are a sole trader and/or property landlord
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Your gross business and rental income exceeded £50,000 in the 2024/25 tax year
This income test looks at turnover, not profit.
What MTD for IT actually means in practice
If you are affected, you will be required to:
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Keep your business and/or property records digitally
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Use MTD-compatible software
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Submit quarterly summaries of income and expenses to HMRC
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Still submit an end-of-year tax return
MTD is mandatory. There is no opt-out once you meet the criteria.
The good news is that the government has confirmed that for those mandated in 2026/27, penalties will not be charged for late quarterly submissions. This is clearly designed as a soft landing year.
That said, the reporting obligations are still real, and getting systems set up early will make life significantly easier.
National Minimum Wage increases from April 2026
From 1 April 2026, minimum wage rates increase again. Employers must pay at least these rates to avoid penalties, back payments and HMRC enforcement action.
The new hourly rates are:
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National Living Wage (aged 21 and over): £12.71
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National Minimum Wage (aged 18–20): £10.85
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National Minimum Wage (aged 16–17 and apprentices): £8.00
This may seem straightforward, but issues often arise where:
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An employee has a birthday during the year
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Hours fluctuate
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Salary deductions reduce pay below the legal minimum
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Payroll settings are not updated promptly
Even small errors can lead to compliance problems.
What you should be doing now
If you are a trader or landlord:
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Check whether your 2024/25 income will push you into MTD
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Start thinking about digital record keeping, even if you are not yet mandated
If you employ staff:
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Review wage rates ahead of April 2026
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Make sure payroll systems are correctly configured
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Ensure age-related changes are being picked up automatically