· 3 min read
Making Tax Digital: sole traders and landlords over £30,000 are next
From 6 April 2027, sole traders and landlords with more than £30,000 of income must keep digital records and send HMRC quarterly updates. Here is what changes.
On 5 October 2026 HMRC published a reminder to sole traders and landlords with income over £30,000: get ready for Making Tax Digital for Income Tax. If that describes you, the way you report your income changes from 6 April 2027.
Making Tax Digital (MTD) has been live since 6 April 2026 for people with qualifying income above £50,000. The £30,000 group joins next, and the threshold falls again to £20,000 from April 2028.
Who has to join, and when
| Qualifying income | MTD starts | Tax year HMRC uses to decide |
|---|---|---|
| Over £50,000 | 6 April 2026 | 2024/25 |
| Over £30,000 | 6 April 2027 | 2025/26 |
| Over £20,000 | 6 April 2028 | 2026/27 |
Qualifying income is your total gross income from self-employment and property, before you take off any expenses. Wages from a job are left out, and so are dividends, savings interest and income from a partnership.
The gross test is what catches people out. A few examples:
- A landlord collecting £32,000 a year in rent with £12,000 of costs has qualifying income of £32,000, so MTD applies from April 2027.
- Someone on a £45,000 salary who also freelances for £18,000 a year and lets a flat for £14,000 has qualifying income of £32,000. The salary does not count, but the two side incomes are added together.
- A sole trader turning over £29,000 stays outside MTD in April 2027, but will be inside it from April 2028 if their income holds up.
What actually changes
Under MTD you:
- keep records of your business and property income and expenses digitally, in software that works with HMRC's systems;
- send a short summary of income and expenses to HMRC every quarter;
- finish the year by submitting your tax return through the same software, by 31 January as now.
Quarterly updates are due by 7 August, 7 November, 7 February and 7 May. They are summaries, and you do not pay tax with them. Payments on account and the January balancing payment carry on as before.
You can still use a spreadsheet if you pair it with bridging software that sends the figures to HMRC. Paper records and typing totals into the HMRC website at the end of the year will no longer be enough.
Penalties for missing deadlines
MTD comes with a points-based system for late submissions. Each missed quarterly deadline adds a point, and once you reach the limit a financial penalty follows. Points expire after a period of sending everything on time, so one slip early on is recoverable. The safest approach is to treat the quarterly dates like the 31 January deadline.
Can you be exempt?
Some people can apply to be exempt, for example where age, disability, location or religious beliefs make digital record keeping impractical. Exemption is not automatic: you need to apply to HMRC and wait for a decision.
How much tax is involved
MTD changes how you report, and the tax you owe is worked out exactly as before. It does make it easier to see your bill building up during the year, which helps if you are not used to setting money aside.
Take the example above: a £45,000 salary, £18,000 of freelance income with £2,000 of costs, and £14,000 of rent with £4,000 of costs. The freelance profit is £16,000 and the rental profit is £10,000. Because the salary already uses most of the basic rate band, almost all of the side income is taxed at 40%.
| Item | 2026/27 |
|---|---|
| Income tax due through Self Assessment | £9,346.00 |
| Class 4 National Insurance on the freelance profit | £205.80 |
| Total Self Assessment bill | £9,551.80 |
| Each payment on account towards the next year | £4,775.90 |
In the first year of having this income, the January bill and the first payment on account land together, so that person would need around £14,300 ready by 31 January. Quarterly updates make that figure visible months earlier.
What to do now
- Add up your gross self-employed and property income for 2025/26. If it is over £30,000, you are in from 6 April 2027.
- Choose MTD-compatible software. HMRC lists free and paid products on GOV.UK, including options for people with simple affairs.
- Start keeping digital records before April so the first quarter is not a scramble. You can also sign up to MTD voluntarily now and get used to it while the stakes are low.
- Put your figures into our calculator, under Other income, to see your Self Assessment bill and payments on account, then set aside a monthly amount to cover it.