Making Tax Digital — what drivers need to know

What is Making Tax Digital?

Making Tax Digital (MTD) for Income Tax is a new HMRC system that replaces the once-a-year Self Assessment tax return with digital record-keeping and quarterly updates. Instead of one return each January, you'll keep your records in HMRC-recognised software and send a summary of your income and expenses every three months, plus a final declaration at year end.

It applies to sole traders and landlords — which is how most taxi and private hire drivers are set up. It does not apply to limited companies.

Does it affect you, and when?

Whether you're in scope depends on your gross income (your total takings before expenses — not your profit), combining all self-employment and any property rental income. The rollout is phased:

What you'll need to do

• Keep your income and expense records digitally in MTD-compatible software (spreadsheets and paper alone don't meet the rules).
• Send four quarterly updates to HMRC through that software.
• Submit a final declaration at the end of the year, which replaces your Self Assessment return.

For the 2026/27 tax year, the quarterly deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027, with the final declaration due by 31 January 2028. HMRC has said there will be no late-filing penalties for the quarterly updates during 2026/27 as people adjust.