Sole trader? You would be wise to get special accounting software and help from 6 April 2026

The government has promoted, albeit with limited effect, a set of planned changes to the tax reporting system for sole traders and non-company landlords.  Here is a summary of what is arriving on 6 April 2026, and continuing over 3 years.

BACKGROUND TO THE CHANGES

• Some people don’t use companies – they operate as sole traders.  In the past, these individuals have used HMRC’s self-assessment website to report their personal and partnership trading results.
• HMRC is withdrawing their self-assessment service over three years, and requiring the public to buy their own software and report their own tax digitally.  This saves HMRC some of the money they spend on software, and means the public takes more of the burden.
• In the future, HMRC will more passively receive the data and use AI more to check it, saving time and money, and reducing the need for government staff to monitor and support self-assessment. The public, and the accountants who help them, will take the strain.
• The old system was annual, but the new system is quarterly, meaning the government can monitor private non-company trading income more accurately, helping government statistics, and making tax billing more predictable for both sides.
• It’s arguably an expensive pain for the public, and hurts the disorganised and non-technological the most. Those at a disadvantage will need help with the burden and cost of complying.
• If you are a sole trader, it’s wise to make the change asap.

SOLE TRADERS (NOT COMPANIES) WITH SALES OVER £50K

From 6 April 2026, sole traders and landlords with income (turnover before expenses from trading and property) of more than £50k (as shown by their 25-26 tax return) will have to report their tax on a digital system, instead of the usual self-assessment tax return system of the past. They will have to:

1. Keep digital, not paper, records, on compatible software
2. Give HMRC quarterly updates on the new online system
3. After each 5 April tax year end, make an online ‘final declaration’ by 31 January

People with lower turnover will be affected from 6 April 2027 and later, but can adopt the system earlier if they want.  This is wise, to get used to it.

REMOVAL OF OLD SELF-ASSESSMENT ONLINE FORM

As the above system comes in, the ability to use the old online self-assessment form will be removed.

SUMMARY

1. If you run a business as a sole trader or landlord (but not through a company), then a new tax reporting system is coming in
2. If your total sales were more than £50k in the year to 5 April 2025, definitely get on the new system from 6 April 2026
3. Even if your sales are lower, get on the new system as soon as possible

WHAT TO DO NEXT

Don’t get caught out. If you are a sole trader, or a landlord, who doesn’t trade through a company, then get in touch with a good accountant asap, someone who can recommend suitable software and assist you with the change.