HMRC Making Tax Digital for taxi and private hire drivers - what you need to do now

Published: July 2026 - Written by a TfL licensed PCO driver

The way self-employed drivers report income to HMRC is changing. Making Tax Digital for Income Tax replaces the familiar annual Self Assessment return with digital record-keeping and quarterly updates, and it is being phased in over the next few years. If you drive for Uber, Bolt, FREE NOW or any other platform as a self-employed sole trader, this affects you.

This guide explains exactly what is changing, when it applies to you, and what you need to do to prepare.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment, usually shortened to MTD for ITSA, is HMRC's replacement for the traditional annual tax return. Instead of filing one Self Assessment return each January, affected taxpayers will need to:

• -Keep digital records of income and expenses using HMRC-recognised software
• -Submit a quarterly update to HMRC every three months
• -Submit a Final Declaration at the end of the tax year, replacing the old annual return

This is a genuine change in process, not just a new form. Paper records and spreadsheets alone will no longer be sufficient once you are within scope.

When does it apply to me?

MTD for Income Tax is being introduced in stages, based on your gross self-employment income (and property income, if you have any):

• -From 6 April 2026: mandatory if your gross self-employment and/or property income is over £50,000
• -From 6 April 2027: threshold drops to over £30,000
• -From 6 April 2028: threshold drops to over £20,000

Your income is measured based on your most recently filed tax return before each threshold date. For example, whether you must join from April 2026 depends on the gross income reported on your 2024/25 tax return, filed by 31 January 2026.

Importantly, this is gross trading income, not profit after expenses. A driver earning £55,000 in fares before deducting fuel, insurance, platform commission and other costs is over the £50,000 threshold, even if their actual take-home profit is considerably lower.

What counts towards the threshold?

Only gross income from self-employment and property counts. This means:

• -Your total driving income (fares before expenses) counts
• -PAYE employment income does not count
• -Investment income, dividends and pension income do not count
• -If you have income from more than one self-employment or from property, these are added together

If you drive part-time alongside other self-employment or rental income, add both together when checking whether you cross a threshold.

What do quarterly updates involve?

Once you are within MTD, instead of one annual return you will submit:

• -Four quarterly updates during the tax year, showing your income and expenses for each three-month period
• -An End of Period Statement and Final Declaration after the tax year ends, by the same 31 January deadline that currently applies to Self Assessment

Quarterly updates are not tax bills. Submitting one does not trigger a payment. They are simply regular digital reports of your income and expenses, which HMRC uses to build an accurate picture throughout the year rather than all at once in January.

What happens if I miss a deadline?

MTD introduces a new points-based penalty system for late submissions, replacing the old fixed penalty approach for those within its scope. Each missed quarterly update or Final Declaration earns a penalty point. Once you reach 4 points, a £200 fine is issued, and further missed deadlines result in further fines.

This makes consistent, on-time digital record-keeping throughout the year more important than ever, rather than trying to catch up on paperwork in January.

Do I need to do anything now if I am under the threshold?

If your gross income is currently under £50,000, you are not required to join MTD in April 2026. However, it is worth knowing that:

• -The threshold drops to £30,000 in April 2027, and £20,000 in April 2028
• -HMRC does not automatically sign anyone up - you need to register yourself once you are within scope
• -You can voluntarily join early if you want to get used to digital record-keeping before it becomes mandatory

Given the threshold keeps falling, most full-time professional drivers will eventually be brought into MTD even if they are not affected in April 2026.

How to prepare, whether you are affected in 2026 or later

Start digital record-keeping now, regardless of your current threshold. Building the habit of logging every fare, every expense and every receipt digitally as you go, rather than reconstructing records once a year, makes the eventual move to MTD far less disruptive - and makes your existing annual Self Assessment return easier too.

Specifically:

• -Log income and expenses as you go, not in a end-of-year scramble
• -Photograph and store every business receipt digitally - HMRC has accepted digital photos of receipts as valid records since 2017
• -Use HMRC-recognised software rather than a plain spreadsheet, so you are ready to submit quarterly updates when required
• -Know your gross income figure, not just your profit, since that is what determines when you are brought into MTD

How Driverr helps

Driverr's expense tracker is built with this transition in mind. Every expense is logged digitally as it happens, receipts are photographed and stored securely, and your complete record can be exported as a CSV file with receipt links for your accountant at any time - not just once a year.

Whether you are affected by MTD from April 2026, April 2027, or later, building the habit of digital record-keeping now with Driverr means the transition costs you nothing in disruption when your threshold arrives.

Download Driverr free at driverr.app.

Disclaimer

This guide provides general information about Making Tax Digital based on current HMRC guidance as of July 2026. Rules, thresholds and dates can change. Always confirm your specific position with a qualified accountant or directly via gov.uk, as this guide does not replace official HMRC guidance.