HMRC rule changes for thousands of drivers who earn more than £30,000

Self-employed taxi drivers earning more than £30,000 a year will soon face new reporting rules from the tax office, as part of a major shake-up in how income and expenses are reported.

Starting April 2027, drivers with annual gross self-employed income between £30,001 and £50,000 will need to switch to digital record-keeping and submit tax updates to HM Revenue and Customs (HMRC) every quarter. This comes under the Government’s Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) scheme, designed to modernise the tax system and reduce errors. Those earning over £50,000 must begin following the new rules a year earlier, in April 2026. The changes will impact thousands of sole trader drivers, particularly those who have relied on paper records or spreadsheets in the past.

Income counted toward the £30,000 threshold includes total earnings from self-employment and rental property before expenses, meaning drivers must consider their gross income, not just profits. However, PAYE wages, dividends, or company income are excluded from the calculation.

Some relief is available for those whose earnings fall over time, TaxiPoint reports. If a driver’s qualifying income drops below £30,000 for three consecutive tax years, they can opt out of the digital system.

Meanwhile, drivers earning between £20,001 and £30,000 are expected to be brought into the scheme from April 2028.

When the new rules are enforced, qualifying drivers must use software that links with HMRC’s Making Tax Digital system. HMRC said the digital transition aims to improve accuracy, reduce errors, and save time.

Experts recommend that affected drivers start preparing now, particularly if they haven’t used digital tools before, as failure to meet the new requirements could result in penalties.

Craig Ogilvie, director of Making Tax Digital at HMRC, said: “With April 2026 on the horizon, we are issuing letters to customers we believe will be mandated, outlining specific requirements and timelines.

“We urge those who meet the mandation criteria to join our testing programme on GOV.UK now to help shape the final service and make your transition smoother.”

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