Making Tax Digital from April 2027: What Sole Traders Earning Over £30,000 Need to Do

Making Tax Digital for Income Tax reaches its second wave on 6 April 2027. From then, sole traders and landlords with qualifying income over £30,000 must keep digital records and send HMRC a quarterly update every three months. HMRC estimates over a million more people are affected.

The test is based on your 2025/26 tax return, the one due by 31 January 2027. So the return you're about to file decides whether you're in.

Are you in MTD from April 2027?

You're in from 6 April 2027 if your qualifying income for 2025/26 is over £30,000, and you're not exempt.

Qualifying income is your gross income, before expenses, from:

• Self-employment (all your sole trades added together)
• UK and foreign property

It doesn't include a salary, pensions, dividends, savings interest or your share of partnership profits. For jointly owned property, you count only your share of the rent.

Examples

• A plumber with £42,000 turnover and £15,000 of costs: qualifying income is £42,000, so in from April 2027, even though profit is £27,000.
• A designer with £24,000 of freelance income who also lets a flat for £9,000 a year: £33,000, so in.
• A teacher earning £45,000 salary with a £12,000 side business: £12,000, so not in yet. The salary doesn't count.

Not sure? Our MTD ITSA readiness checker works it out in a minute.

When will HMRC write to you?

HMRC looks at your 2025/26 return after you file it and writes to you if you're over the threshold. But the letter isn't what puts you in: it's still your responsibility to check, even if no letter arrives.

This creates a timing trap. If you file on 31 January 2027, you'll have only two months' notice before your first MTD quarter starts. File your 2025/26 return early and you'll know where you stand by the end of the year.

Your key dates

• 31 January 2027 — file your 2025/26 return and pay the tax due. This return decides whether you're in.
• Before 6 April 2027 — choose MTD-compatible software and start digital records
• 6 April 2027 — MTD applies. Your records for 2027/28 must be digital from this day.
• 7 August 2027 — first quarterly update due (6 April to 5 July)
• 7 November 2027, 7 February 2028, 7 May 2028 — the next three
• 31 January 2028 — your last old-style tax return, for 2026/27
• 31 January 2029 — your first MTD final declaration, for 2027/28

So in January 2028 you'll be doing both: an ordinary return for 2026/27, while already sending quarterly updates for 2027/28.

Penalties apply from day one

People who joined in April 2026 got an easement: no penalty points for late quarterly updates in 2026/27. That easement ends. From 2027/28:

• Each late quarterly update earns 1 penalty point
• At 4 points you get a £200 penalty, and another £200 for every late submission after that while you're at the threshold
• Late final declarations and late payment are penalised as before

So if you join in April 2027, your very first quarterly update can earn a point. A practice run before then is worth it.

What a quarterly update involves

A quarterly update isn't a tax return. It's a summary of your income and expenses for the tax year to date, sent from your software.

• One update per business, so a sole trader who also lets property sends two
• Cumulative: each update covers the year to date, so you fix mistakes in the next one
• Turnover under £90,000? You can send just total income and total expenses
• No extra tax payments. You still pay on 31 January and 31 July

After the year ends, you finalise each business and submit a final declaration, which replaces the Self Assessment return. Our guide to MTD ITSA quarterly updates covers the detail.

Exemptions

Most people can't opt out, but some are exempt:

• People who are digitally excluded, for example because of age, disability or where they live. You have to apply to HMRC.
• Some groups are exempt automatically, such as people without a National Insurance number, and trustees.

If your qualifying income is £30,000 or less, you aren't in yet. But at over £20,000, you will be from April 2028.

Your six-month plan

1. October to December 2026: file your 2025/26 return early, and work out your qualifying income.
2. Now: open a separate business bank account if you don't have one. It makes digital records almost automatic.
3. Choose software that's on HMRC's list of recognised MTD for Income Tax software, and move off paper or spreadsheets.
4. January to March 2027: run your bookkeeping in the software so the habit is in place before 6 April. You can also sign up voluntarily early.
5. Diarise 7 August 2027 for your first update, and set reminders for the other three.
6. Tell your accountant if you have one. They can be authorised to submit for you.

Get ready for MTD with AccLedger

AccLedger is HMRC-recognised, full end-to-end MTD for Income Tax software, built for sole traders and landlords:

• Bank feeds bring your income and expenses in automatically, with suggested categories
• Connect to HMRC once, and AccLedger reads your obligations and deadlines
• Quarterly updates are prepared from your live records, one per business, for you to review and submit
• Reminders before every deadline, and a running tax estimate after every update
• End of year and final declaration in the same place

Plans start at £7.50 a month for sole traders and £5 a month for landlords, with unlimited MTD submissions. Start a 30-day free trial — no card needed.

Frequently asked questions

Does MTD apply to me from April 2027? Yes, if your gross self-employment and property income on your 2025/26 tax return was over £30,000 and you're not exempt.

Is the £30,000 threshold based on turnover or profit? Turnover: gross income before expenses. A business with £35,000 of sales and £20,000 of costs is in.

Does my salary count towards the £30,000? No. Only self-employment and property income count. Employment, pensions, dividends, savings and partnership income are left out.

When is my first MTD quarterly update due? 7 August 2027, for 6 April to 5 July 2027.

Is there a penalty easement for April 2027 joiners? No. The no-points easement covers 2026/27 only. From 2027/28, each late quarterly update earns a point, and 4 points means a £200 penalty.

Do I still file a tax return in January 2028? Yes. The 2026/27 return, due 31 January 2028, is filed the normal way. Your first final declaration is for 2027/28, due 31 January 2029.

Can I use spreadsheets for MTD? Only alongside software that links to them and submits to HMRC digitally. Most sole traders find it simpler to keep the records in the software itself.

This article is general guidance based on HMRC rules as of October 2026 and is not tax advice. Your HMRC letter and obligations show the exact dates that apply to you.