Checked against HMRC guidance and the Budget 2026 documents on 11 November 2026. I’ll update this page when the rules change.
If you’re a sole trader or landlord and your income from work and property was more than £30,000 last tax year, Making Tax Digital for Income Tax (MTD) applies to you from 6 April 2027. HMRC estimates that’s around 1,077,000 more people joining in one go.
This guide covers who’s in, what Budget 2026 changed for this group, the dates that matter, and a checklist you can work through before April. It’s written for people who’d rather get on with their work than read HMRC manuals.
The short answer
You’ll need to use MTD from 6 April 2027 if you’re registered for Self Assessment, you have self-employment income, property income or both, and your combined gross income from those sources was more than £30,000 in the 2025 to 2026 tax year (6 April 2025 to 5 April 2026). It’s your takings before expenses, not your profit.
HMRC works this out from the 2025 to 2026 Self Assessment tax return, which is due by 31 January 2027. If your figure is over the line, HMRC writes to tell you.
Who it applies to
According to HMRC, you need to use MTD for Income Tax if all of these are true:
- you’re a sole trader or a landlord registered for Self Assessment
- you have income from self-employment, property, or both
- your qualifying income is over the threshold for the relevant tax year
The thresholds are being phased in:
| Your qualifying income in… | Is more than… | You start MTD on… |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 (already live) |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
Partnerships aren’t included yet. HMRC says they’ll join in future, with dates to be confirmed.
What counts as qualifying income
This is where most people trip up. Qualifying income is your gross income from self-employment and property added together, before any expenses come off. So a plumber who turned over £34,000 and made £19,000 profit has qualifying income of £34,000, and is in.
- Counts: self-employed takings (turnover), rental income, and your share of rent from a jointly owned property.
- Doesn’t count: wages from a PAYE job, pensions, dividends and savings interest.
- CIS subcontractors: it’s the full amount you invoiced, before the contractor took the 20% CIS deduction.
I’ve written a separate guide with worked examples for tricky cases: how to work out your qualifying income. Or you can run your numbers through the free MTD start-date checker, which takes about 30 seconds.
What Budget 2026 changed for the April 2027 group
The Budget on 28 October 2026 kept the rollout on track, but two details in the small print matter if you’re joining in April 2027.
1. No penalty points for late quarterly updates in your first year
If you join MTD from April 2027, you won’t get penalty points for sending your quarterly updates late during the 2027 to 2028 tax year. The April 2026 group got the same treatment for 2026 to 2027.
Don’t read that as “quarterly updates are optional”. They’re still a legal requirement, and you can’t file your end-of-year MTD tax return until all four are in. The soft landing also doesn’t cover a late tax return or paying your tax late. Those penalties still apply.
2. Four groups are exempt until further notice
The government confirmed these groups won’t need to join MTD for Income Tax for now, with legislation due before April 2027:
- people eligible for qualifying care relief, such as foster carers
- non-UK resident foreign entertainers and sportspeople
- people who expect to become non-UK resident in the coming tax year
- people HMRC can’t yet provide a digital service for, including some insolvent taxpayers
There are other exemptions too, including for people who are digitally excluded (for example because of age, disability or where they live). Some apply automatically and some you have to apply for. HMRC’s exemption guidance has the full list.
The catch if you joined in April 2026
If you’re in the first group (over £50,000), your soft landing ends after this tax year. From 2027 to 2028, a late quarterly update earns a point, starting with the one due on 7 August 2027. Four points means a £200 penalty, and each late submission after that costs another £200.
The dates that matter
| Date | What happens |
|---|---|
| 31 January 2027 | Deadline for your 2025 to 2026 Self Assessment return. This is the return HMRC uses to decide if you’re in. |
| 6 April 2027 | MTD starts for you. Keep digital records from this date. |
| 7 August 2027 | First quarterly update (covering 6 April to 5 July 2027). |
| 7 November 2027 | Second quarterly update. |
| 31 January 2028 | Your 2026 to 2027 tax return, filed the old way, plus tax due as normal. |
| 7 February 2028 | Third quarterly update. |
| 7 May 2028 | Fourth quarterly update. |
| 31 January 2029 | Your first MTD tax return (for 2027 to 2028) and the tax for that year. |
Those are the standard quarterly dates. You can choose calendar quarters instead (1 April to 30 June and so on) and the deadlines stay the same. Updates are cumulative: each one covers the tax year so far, not just the latest three months. The MTD deadlines page has a calendar file you can add to your phone.
What actually changes day to day
Less than the headlines suggest. In practice MTD means three things:
- Keep your records digitally. Income and expenses go into software (or a spreadsheet linked to software) as you go, not into a shoebox for January.
- Send a quarterly update. A short summary of your income and expenses, sent from your software. It isn’t a tax return and you don’t pay tax quarterly.
- File your tax return from the software. After the tax year ends, you make any adjustments, add other income and submit by 31 January as usual.
Your payment dates don’t change. Tax is still due on 31 January, with payments on account on 31 January and 31 July if they apply to you.
Your checklist before April 2027
- Work out your 2025 to 2026 qualifying income. Add up gross takings and gross rents for 6 April 2025 to 5 April 2026. If it’s anywhere near £30,000, don’t guess. Use the checker.
- File your 2025 to 2026 return early. November or December beats the last week of January. It gives you certainty sooner and leaves time to set things up.
- Check whether an exemption applies. Especially if you’re a foster carer, non-resident, or find it genuinely hard to use digital services.
- Choose your software. It must be on HMRC’s list of recognised products. There are free options for simple sole traders and landlords. If you love your spreadsheet, you can keep it and use bridging software to submit.
- Consider a separate bank account for the business. Not required, but it makes digital records far easier if your software pulls in bank transactions.
- Sign up on GOV.UK. You need to be registered for Self Assessment and have sent a return in the last two years. HMRC encourages people to sign up early so they can practise before it’s mandatory. If you have an accountant, they can sign you up as your agent.
- Put the quarterly dates in your diary. Set reminders a week before each one.
- Decide who’s doing it. If you’ll use an accountant or bookkeeper, talk to them now. They’re about to get very busy.
Common questions
My profit is under £30,000. Am I still in?
Probably, if your takings were over £30,000. MTD looks at gross income before expenses, not profit.
I have a PAYE job and a side business. Does my salary count?
No. Only self-employment and property income count. If your side business turned over £12,000 and you have no rental income, you’re not in MTD from April 2027, whatever your salary.
What if my income drops below £30,000 later?
Once you’re in, you stay in until your qualifying income has been below the threshold for three tax years in a row while you’re using MTD. If all your self-employment and property income stops, tell HMRC, as you won’t need to use MTD.
Do I have to pay tax every quarter now?
No. Quarterly updates are information only. Tax is still calculated after the end of the year and paid on the usual Self Assessment dates.
Can I keep using a spreadsheet?
Yes, as long as you use HMRC-recognised bridging software to send the figures. The spreadsheet has to be digitally linked to the submission, so no retyping totals by hand.
I haven’t had a letter from HMRC. Can I ignore this?
No. HMRC says it writes to people once it reviews their return, but if you think you meet the threshold you should sign up anyway. See what to do if you get an HMRC letter about MTD.
What I’d do next
Check your number first. Everything else depends on it.
Sources: HMRC, Find out if and when you need to use Making Tax Digital for Income Tax; HMRC press release Sole traders and landlords earning more than £30,000 urged to act now (5 October 2026); If your circumstances change; ICAEW summary of the Budget 2026 MTD announcements (28 October 2026). This is general information, not tax advice. I’m not an accountant. For decisions about your own tax, speak to HMRC or a qualified adviser.