Making Tax Digital for Income Tax: Sole Traders and Landlords Over £30,000 Join in April 2027
From 6 April 2027, sole traders and landlords with qualifying income over £30,000 must use Making Tax Digital for Income Tax. HMRC estimates about 1,077,000 more people are affected, and the threshold falls to £20,000 in April 2028.
By Entrepreneur Group · Published · Updated
From 6 April 2027, sole traders and landlords whose self-employment and property income adds up to more than £30,000 must use Making Tax Digital (MTD) for Income Tax. That means keeping digital records, using HMRC-recognised software and sending HMRC a short update every quarter. HMRC estimates about 1,077,000 more people will be brought in, based on 2024 to 2025 Self Assessment returns.
The first group, with income over £50,000, has had to use MTD since 6 April 2026. The threshold falls again, to £20,000, in April 2028.
Who is affected
The £30,000 test is based on turnover, not profit. HMRC says it means gross income from self-employment and property, before expenses or tax allowances are deducted. So a sole trader with £32,000 of sales and £15,000 of costs is still over the threshold.
Some people are exempt, including those who are digitally excluded. HMRC points to GOV.UK for the full list of exemptions and how to apply.
HMRC's announcement is aimed at sole traders and landlords. If you trade through a limited company, ask your accountant whether any personal self-employment or rental income you have brings you into scope.
What you will need to do
According to HMRC:
- Sign up on GOV.UK. You must already be registered for Self Assessment and have filed a tax return in the last two years. An accountant or other agent can sign you up.
- Keep digital records of income and expenses in software that HMRC recognises. HMRC publishes a list of compatible products on GOV.UK.
- Send quarterly updates. HMRC describes these as short summaries of income and expenses, not extra tax returns.
- Finish your tax return through the software at the end of the year.
HMRC is encouraging people to sign up voluntarily before the rules apply. Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "Signing up now means you can prepare and familiarise yourself with the process before it becomes mandatory next April."
A practical plan
This section is editorial guidance, not tax advice.
- Work out your figure. Add up your gross self-employment and property income from your latest return. If it is over £30,000, or close to it and growing, plan to be ready for April 2027.
- Choose software early. Try one or two products from HMRC's list now. Moving from spreadsheets or paper takes longer than most people expect.
- Sort your records. Separate business and personal bank accounts make digital record-keeping much easier.
- Talk to your accountant. Agree who will send the quarterly updates and what it will cost.
- Watch the Budget. Simply Business notes that changes to MTD timelines or penalties are possible at the 28 October Budget, though nothing has been announced.
Frequently asked questions
Who has to use Making Tax Digital from April 2027?
Sole traders and landlords whose combined gross self-employment and property income is more than £30,000 must use Making Tax Digital for Income Tax from 6 April 2027.
Is the Making Tax Digital threshold based on profit or turnover?
Turnover. HMRC says it is gross income from self-employment and property, before expenses or tax allowances are deducted.
When does the Making Tax Digital threshold fall to £20,000?
The threshold falls to £20,000 in April 2028. The £50,000 threshold applied from 6 April 2026 and the £30,000 threshold applies from 6 April 2027.
Sources
- HMRC: Sole traders and landlords earning more than £30,000 urged to act now (5 October 2026) (reviewed 27 October 2026)
- Simply Business: Autumn Budget 2026 predictions for small businesses (reviewed 27 October 2026)