Finance
Making Tax Digital reaches sole traders over £30,000 from April 2027
Sole traders and landlords earning over £50,000 have used it since April 2026. HMRC estimates around 1,077,000 more will need it from April 2027.
By Tasmin Angelina Houssein , Founder & Creator , , 4 min read
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On 6 April 2026, Making Tax Digital for Income Tax became mandatory for sole traders and landlords earning more than £50,000, according to HMRC. Making Tax Digital is a UK government programme run by HM Revenue and Customs (HMRC), the department that collects taxes. It requires businesses and some individuals to keep their tax records in digital form and to send information using approved software. If you earn from self-employment or rent out property, the threshold that decides whether you must use it is falling, so income that is outside the rules now may be inside them by April 2027 or April 2028.
The first threshold is already live
A sole trader is someone who runs a business as an individual, with no separate company set up for it. Sole traders are self-employed, but they can still hire staff. Anyone in this group earning more than £50,000 has been using Making Tax Digital since April 2026. Their next milestone is the second quarterly update, due on 7 November. Each quarterly update gives a short summary of business or property income and expenses, and must be sent to HMRC every three months using compatible software.
What counts toward the figure
The test uses a figure called qualifying income. In UK tax, it is the figure HMRC applies to decide who must use Making Tax Digital for Income Tax. Qualifying income counts a person's total income from self-employment and property across a tax year, before expenses are taken off. Wages, pensions and dividends do not count towards it. Turnover, in this test, includes gross income from self-employment and property, counted before any tax allowances or expenses are deducted.
Warning
Do not read the £50,000 as profit. The test counts what comes in before costs, so a business can be caught while making a small profit or a loss.
What a quarterly update is, and what it is not
A tax return is a form where a person or business sets out income, gains and any reliefs claimed for a set period. The tax authority uses it to work out how much tax is due. In the UK, people who need one file it through Self Assessment, the system for reporting their own income to HMRC so that Income Tax can be collected on money not taxed through wages. Self Assessment mainly applies to self-employed people and landlords. They file a tax return once the tax year has ended and pay what they owe.
Quarterly updates are not additional tax returns. HMRC describes them as short summaries. For the first tax year, 2026 to 2027, HMRC will not apply penalty points for late quarterly updates. Penalties still apply for late tax returns, and also when a tax bill is paid after its due date.
Signing up before it is compulsory
From September 2026, HMRC will begin signing up people who are required to use Making Tax Digital for Income Tax in 2026 to 2027 but have not yet signed themselves up. Customers who sign up early get more time to pick software that works with the service and to prepare at their own pace.
Signing up now means you can prepare and familiarise yourself with the process before it becomes mandatory next April. — Craig Ogilvie, HMRC's Director of Making Tax Digital
Where the threshold goes next
The threshold falls in steps. From 6 April 2027, Making Tax Digital for Income Tax extends to sole traders and landlords earning more than £30,000. HMRC estimates that around 1,077,000 more sole traders and landlords will need to use it from that date. The estimate is based on HMRC analysis of 2024 to 2025 Self Assessment returns.
| Starts | Income threshold | Who is caught |
|---|---|---|
| 6 April 2026 | more than £50,000 | Sole traders and landlords earning more than £50,000, already mandatory |
| 6 April 2027 | more than £30,000 | Around 1,077,000 more sole traders and landlords |
| April 2028 | £20,000 | An even wider group, according to HMRC |
The 2027 threshold is based on qualifying income for 2025 to 2026, and the 2028 threshold on qualifying income for 2026 to 2027. Each step brings more people into the rules for digital records and quarterly updates.
What to watch next
- September 2026: HMRC begins signing up people who still need to join for 2026 to 2027.
- 31 January 2027: the deadline to submit a Self Assessment tax return and pay tax for 2025 to 2026.
- April 2028: the threshold falls to £20,000.
This article explains how things work. It is not financial advice.
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