Making Tax Digital 2026: The Contractor & Locum's Essential Guide

If you're a contractor, locum doctor, or freelancer earning over £50,000 from self-employment or property in the UK, the tax system changed fundamentally on 6 April 2026. Making Tax Digital (MTD) for Income Tax is now live - and if you haven't prepared, you could already face penalties.

Here's everything you need to know, written in plain English by a Chartered Accountant who works exclusively with people like you.

What is Making Tax Digital?

Making Tax Digital is HMRC's overhaul of personal tax reporting - the biggest change in 30 years. Instead of filing one annual Self Assessment return, you must now use approved digital software to keep records and submit updates to HMRC every quarter, followed by a year-end final declaration.

For many contractors and locums, the annual tax return was already stressful enough. MTD doesn't replace that pressure - it redistributes it across the year. Which, done properly, actually makes life easier.

Does MTD apply to me?

You're affected from April 2026 if your gross qualifying income from self-employment and/or property exceeded £50,000 in the 2024/25 tax year. "Gross" means total turnover before expenses - not profit.

If you're a locum GP working across multiple NHS trusts, your combined income from all contracts counts. If you're a contractor and a landlord, self-employment income plus rental income are added together. Many people are surprised to discover they meet this threshold when combining sources.

The rollout timeline

• April 2026: income above £50,000
• April 2027: income above £30,000
• April 2028: income above £20,000

Even if you're below £50k today, this is coming. Getting set up early is always easier than scrambling later.

What do you actually have to do?

• Check your 2024/25 Self Assessment return - confirm your gross qualifying income
• Register for MTD on the HMRC portal (this is NOT automatic)
• Choose HMRC-approved software (Xero, QuickBooks, FreeAgent, Sage)
• Submit your first quarterly update by 7 August 2026 (covering 6 April – 5 July)
• Continue quarterly, then submit your final declaration by 31 January each year

What are the penalties?

MTD uses a points system. Each missed submission = 1 point. Reach 4 points = £200 fine, plus £200 for every subsequent miss. There is a grace period for the first year, but don't rely on it.

The Inquirx approach

At Inquirx, we handle the entire MTD process for our clients - from registration and software setup to submitting every quarterly update and your year-end return. You don't need to think about it.

If you're a locum, contractor, or freelancer unsure whether MTD applies to you, book a free 30-minute consultation and we'll tell you exactly where you stand.