Making Tax Digital: What Legal Locums Need to Know

If you work as a locum in the private practice legal sector - covering for law firms on a self-employed or sole trader basis - a significant change to how you report your income to HMRC is coming fast.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is rolling out from 6 April 2026, and for many legal locums earning above the relevant thresholds, the way you manage your tax affairs is about to look quite different.

Here's what you need to know, and what you should be doing right now.

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What Is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) is HMRC's initiative to modernise the UK tax system by requiring businesses and self-employed individuals to keep digital financial records and submit tax information electronically using HMRC-recognised software. MTD has already been in place for VAT since April 2022. Now, it's expanding to cover Income Tax.

Under MTD for ITSA, the familiar annual Self Assessment tax return is being replaced, at least in part, by a new system of quarterly digital submissions, followed by a year-end Final Declaration. The goal is to give both HMRC and tax payers a clearer, more real-time picture of income and tax liability throughout the year.

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Does This Apply to all Legal Locums?

If you are a self-employed locum solicitor, barrister, paralegal, advisor or legal consultant and you area sole trader (rather than operating through a limited company), MTD for ITSA almost certainly applies to you. The rollout is based on your total qualifying income from self-employment and/or property and follows this schedule:

• From 6 April 2026 — if your qualifying income exceeds £50,000
• From 6 April 2027 — if your qualifying income exceeds £30,000
• From 6 April 2028 — if your qualifying income exceeds £20,000

HMRC will use your most recent Self Assessment return to determine which threshold applies to you. It is important to note that you will not be enrolled automatically - you need to sign up yourself, so acting promptly is essential.

If you operate through a limited company, MTD does not apply to you at this stage, though you may already be subject to MTD for VAT if you are VAT-registered.

One nuance that catches many legal locums out: if you work both as a PAYE employee for a law firm and as a self-employed locum, only your self-employment income counts towards the MTD threshold. Your employed income does not factor in. This distinction is worth double-checking if your working arrangements are mixed.

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What Changes Under MTD?

The most significant practical change is the move from one annual tax return to four quarterly submissions plus a Final Declaration at the end of the tax year.

‍Digital record-keeping is now mandatory. Gone are the days of keeping fee notes in a drawer or tracking income on a spreadsheet you update once a year in January. Under MTD, you must use HMRC-compatible software to record your income and expenses on an ongoing basis throughout the year.

‍Quarterly updates must be submitted to HMRC roughly every three months. The deadlines fall on 7 August, 7 November, 7 February, and 7 May. These updates report your income and expenses for the preceding quarter. If you earn income from both your locum work and, say, rental property, you will need to keep separate records for each and submit separate quarterly updates.

‍The Final Declaration replaces the traditional Self Assessment tax return. At the end of the tax year, you will use your software to submit this consolidated return and because you will have been reporting quarterly, much of the work should already be done.

‍Crucially, you do not pay tax four times a year. The quarterly submissions are for reporting purposes only. Your tax payment deadline remains 31 January following the end of the tax year, exactly as it does now.

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What Stays the Same?

Quite a lot, actually. Self Assessment as a concept has not disappeared; you are still assessing your own tax liability. Your Self Assessment Unique Taxpayer Reference (UTR) remains the same. And the 31 January payment deadline is unchanged.

In your first year under MTD, you will also still need to complete a conventional Self Assessment tax return for the preceding tax year in the usual way, since you will not yet have submitted quarterly updates for that period.

HMRC has also confirmed a soft landing for 2026-27: there will be no penalties for late quarterly submissions in the first year, though late payment penalties will still apply. This grace period does not mean you should delay getting set up - the administrative habits you build now will determine how smoothly you manage the system going forward.

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Practical Steps for Legal Locums

‍1. Check your threshold. Review your most recent Self Assessment return and work out your total qualifying income. If it is above £50,000, you need to act now ahead of 6 April 2026.

‍2. Choose your software. You will need HMRC-recognised MTD-compatible software. A range of options exists, from full-featured accounting packages to simpler book keeping apps. Some are free; others charge a monthly or annual fee. Whichever you choose, confirm it is on HMRC's approved list at gov.uk.

‍3. Get your records in order. If your current record-keeping is informal, now is the time to organise it. Collect your invoices, receipts, bank statements, and any records of business expenses such as professional memberships, CPD costs, travel to client sites, professional indemnity insurance, and so on. All of this will need to flow through your digital records.

‍4. Sign up. Once your software is ready and your records are in shape, register for MTD on the HMRC website. Do not leave this until the last moment.

‍5. Consider working with an accountant. If you do not already use one, an accountant familiar with MTD can be invaluable, both in helping you setup compliant systems and in ensuring your quarterly updates accurately reflect your income and allowable expenses as a legal professional. The quarterly cadence also means errors can be spotted and corrected much sooner than with an annual return.

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Penalty Points

HMRC is introducing a points-based penalty regime alongside MTD. Each missed submission deadline earns you a penalty point, and once you accumulate enough points, a financial penalty follows. The number of points that trigger a fine depends on how many submissions you are expected to make each year.

For legal locums used to the annual rhythm of Self Assessment, the shift to four submissions a year represents a real change in discipline. Missing quarterly deadlines could have cumulative consequences, so building a reliable process, whether you manage this yourself or through an accountant, is genuinely important.

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A Note on Mixed Employment Situations

Many legal locums have mixed income streams: perhaps you have a part-time role at a firm on PAYE alongside your freelance work, or you cover locum shifts for multiple chambers or practices. As noted above, only your self-employment income counts towards the MTD threshold. However, once you are within the system, all yourself-employment income must be reported through MTD, and you will still need to account for your employed income through the existing PAYE and Self Assessment processes.

If your situation is complex with multiple income streams, expenses split across different types of work, or uncertainty about what is and is not deductible as a legal professional - this is precisely the kind of scenario where professional advice pays for itself.

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The Bottom Line

Making Tax Digital represents the biggest shake-up to personal tax administration in a generation.

For legal locums in private practice, the key message is straightforward: if your self-employment income exceeds £50,000, you need to be compliant by 6 April 2026. If it is between £30,000 and £50,000, you have until April 2027. And if it is currently below £20,000, keep the April 2028 date on your radar.

The system is more demanding than annual Self Assessment in terms of frequency, but if you invest in the right software and build consistent habits around record-keeping, the quarterly submissions themselves need not be burdensome. Many accountants and software providers are reporting that for clients who prepare well, MTD actually provides greater financial clarity throughout the year, which for a busy locum juggling multiple clients and fee structures, is no small thing.

Start preparing now. The deadline for those above £50,000 is weeks away.

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This post is for general informational purposes only and does not constitute tax or legal advice. Please consult a qualified accountant or tax adviser regarding your specific circumstances.

‍If you wish to discuss Making Tax Digital further, or we can assist regarding any other locum related query, please contact Luke Grant.