HMRC says there are now about six months to go until Making Tax Digital (MTD) for Income Tax reaches more sole traders and landlords. It is urging those affected to sign up and start preparing.
What is changing
From 6 April 2027, sole traders and landlords with a turnover of more than £30,000 will have to use MTD for Income Tax. HMRC estimates this will bring in around 1,077,000 more people.
If you are affected, you will need to:
- keep digital records of your income and expenses
- use HMRC-recognised software
- send HMRC quarterly updates
- complete your tax return using the software
HMRC says the quarterly updates are not extra tax returns. They are short summaries.
Who is affected
The £30,000 test looks at your turnover. That means your gross income from self-employment and property, before any tax allowances or expenses are taken off. If you have both, check the combined figure.
If you earn more than £50,000, you should already be using the service. It became mandatory from 6 April 2026. HMRC says the next quarterly update for that group is due on 7 November.
What you need to do
- Check whether your turnover is over £30,000.
- Sign up on GOV.UK. To do this, you must be registered for Self Assessment and have submitted a tax return in the last two years.
- Choose software from the list of compatible products on GOV.UK.
HMRC says signing up early gives you time to get your details right and pick software that suits you. Agents can also sign up clients on their behalf.
Looking further ahead
HMRC says the threshold will drop again to £20,000 from April 2028.
There are some exemptions, including for people who are digitally excluded. HMRC points to GOV.UK for the details.
If you would like help checking whether this applies to you, or getting set up, please contact Oval Accountants.
Written by the team at Oval Accountants in Burgess Hill. If you're not sure how this affects you, ask us or call 01444 716592.
