HMRC plans to eliminate paper letters for millions of taxpayers starting in April next year. This move towards a “digital by default” approach is part of the tax office’s efforts to save £50 million annually by 2028/29.
The Budget announcement last month confirmed the gradual phasing out of paper communications, set to commence in April 2026. Going forward, taxpayers will receive digital letters through their HMRC online account or via the HMRC app. However, HMRC will still send letters to households without internet access or facing difficulties with digital services, and their phone lines will remain operational.
Taxpayers who prefer paper letters can choose to continue receiving them. Initially, individuals using the HMRC app, online Personal Tax Account (PTA), or Business Tax Account (BTA) will be affected.
HMRC will prompt individuals to verify their contact details when the rollout begins, as letters are sent for various reasons such as changes in tax codes or self-assessment registrations.
In a recent update, HMRC disclosed sending over 200,000 letters to sole traders and landlords with qualifying income exceeding £50,000. These recipients will soon have to submit quarterly updates using HMRC-approved software if their turnover surpasses £50,000 from self-employment or property income.
While the rollout starts in April 2026, HMRC advises people to prepare for the transition promptly. Taxpayers will need suitable software, with free and paid options available. The software will provide real-time tax estimates throughout the year, aiding in cash flow management and avoiding surprises in January.
HMRC emphasized the importance of finding software tailored to individual business needs, enabling seamless integration with existing records and meeting new requirements. According to Making Tax Digital director Craig Ogilvie, the implementation of Making Tax Digital for Income Tax aims to distribute tax administration over the year, reducing the stress of completing Self Assessment returns in January.
Early feedback from testing participants indicates that the system is user-friendly once individuals become familiar with it.