HMRC is set to eliminate paper letters for millions of taxpayers starting in April of the following year. The tax office aims to transition to a “digital by default” approach to save £50 million annually by 2028/29.
In the recent Budget announcement, it was confirmed that the gradual phasing out of paper communications will commence in April 2026. Taxpayers will now receive digital letters through their HMRC online accounts or the HMRC app. However, HMRC will continue to send letters to households without internet access or facing difficulties with digital services, while keeping their phone lines operational.
Taxpayers who prefer paper letters can choose to continue receiving them. Initially, individuals who already use the HMRC app, online Personal Tax Account (PTA), or Business Tax Account (BTA) will be affected, as highlighted by Which?.
When the rollout begins, HMRC will prompt taxpayers to confirm their contact details. Letters from HMRC serve various purposes, such as notifying about changes in tax codes or registering for self-assessment. HMRC has already dispatched over 200,000 letters to sole traders and landlords with qualifying income exceeding £50,000, informing them of the upcoming requirement to submit quarterly updates using HMRC-approved software if their turnover surpasses £50,000 from self-employment or property income.
While the rollout is scheduled for April 2026, HMRC advises individuals to start preparing for the transition now. Taxpayers will need suitable software for compliance, with both free and paid options available. The software will provide real-time tax bill estimates throughout the year, aiding in cash flow management and avoiding surprises come January.
According to HMRC, taxpayers should find software that suits their business needs. Those already using spreadsheets or accounting software can opt for compatible software that integrates with existing records to meet the new requirements. Making Tax Digital director Craig Ogilvie emphasized the importance of preparing for tax changes early, highlighting the benefits of MTD for Income Tax in spreading tax admin tasks across the year.
HMRC assures that the new system is user-friendly, with free software options available. Early feedback from testing participants indicates that once users are familiar with the system, it is straightforward to navigate.