MTD for Income Tax at £30,000: what changes in April 2027 and what to do now

This is general information, not tax advice. Some links on this page are affiliate links; see our disclosure.

Short answer: if your combined gross income from self-employment and property was over £30,000 in the 2025–26 tax year, you must use Making Tax Digital (MTD) for Income Tax from 6 April 2027. That means keeping digital records in HMRC-recognised software, sending HMRC a quarterly update four times a year, and filing a final declaration instead of the usual Self Assessment return. The government expects about 970,000 more sole traders and landlords to join at this stage (GOV.UK).

The three thresholds

Source: GOV.UK eligibility guidance. HMRC works this out from the Self Assessment return you file for that year, so the 2025–26 return (due by 31 January 2027) is the one that decides whether you start in April 2027.

What counts as "qualifying income"

Add together your gross (before expenses) income from:

• self-employment (all your sole-trader businesses), and
• UK and overseas property.

It does not include wages from a PAYE job, pensions, dividends or savings interest.

Example 1: a plumber turning over £24,000 who also lets a flat for £9,600 a year has qualifying income of £33,600. They're in from April 2027, even though neither income is over £30,000 alone.

Example 2: a nurse earning £38,000 in PAYE salary with £6,000 a year from a side business has qualifying income of £6,000. They're out.

Example 3: a couple jointly own a let earning £40,000 a year. Each counts their own share, so £20,000 each. On property alone, neither is in from April 2027 (but both would be at the £20,000 threshold from April 2028 if their share is over it).

What you'll have to do

1. Keep digital records. Every transaction needs a date, amount and category, kept in software or a spreadsheet linked to bridging software.
2. Send quarterly updates by 7 August, 7 November, 7 February and 7 May. They're running totals for the year so far, not a tax bill.
3. File a final declaration by 31 January after the tax year ends. This replaces your Self Assessment return.

For someone starting in April 2027, the first quarterly update is due by 7 August 2027 and the first final declaration by 31 January 2029. You still file a normal Self Assessment return for 2026–27 by 31 January 2028.

Penalties

MTD uses penalty points. Each missed quarterly deadline earns one point (one per deadline, even if you have several businesses). At 4 points you pay a £200 penalty, then £200 for each later miss. Points expire after 24 months if you stay under the limit (GOV.UK).

HMRC isn't charging penalties for missed quarterly updates in the 2026–27 tax year, which covers the £50,000 group's first year. It hasn't said whether the April 2027 group will get the same grace period. Plan as if you won't.

Can you get out of it?

Some people are automatically exempt, including those with qualifying income of £20,000 or less, anyone without a National Insurance number, trustees and personal representatives, and Lloyd's members. Some groups (such as foster carers and people using averaging relief) are exempt until at least April 2027.

You can also apply to be treated as digitally excluded if using software isn't reasonable because of your age, a disability, religious belief or no internet access. HMRC won't accept cost or unfamiliarity alone as a reason (GOV.UK).

Your six-step plan, starting now

1. Check your 2025–26 numbers. Add your gross self-employed turnover and rent received for 6 April 2025 to 5 April 2026. Over £30,000? You're in.
2. Separate your money. A dedicated account makes digital records far easier. It isn't legally required for sole traders. Do you need a separate bank account?
3. Choose your software before January. Pick by income type: landlords, sole traders on a budget, or spreadsheet keepers.
4. Run it alongside your current method from January to March 2027. Three months of practice means April isn't your first go.
5. Sign up for MTD through GOV.UK once you're ready. HMRC lets people join early as volunteers, and volunteers' quarterly updates aren't penalised (GOV.UK).
6. Put the deadlines in your calendar: 7 August 2027, 7 November 2027, 7 February 2028, 7 May 2028.

Quick answers

I'm over £30,000 but I use an accountant. Do I need to do anything? Your accountant can submit for you, but you'll still need records in compatible software. Ask them now which product they want you to use.

Is HMRC providing free software? HMRC says free products are available for people with simple tax affairs, with limits on how they can be used (GOV.UK). See our free and cheap options.

Do I pay tax quarterly now? No. Quarterly updates are reports, not payments. Your payment dates stay the same.

Sources: GOV.UK: check if you're eligible; GOV.UK: send quarterly updates; GOV.UK: penalties; GOV.UK: exemptions; GOV.UK press release, 22 April 2025.

More MTD guides

• Best MTD software for landlords (2026): 12 options compared by priceEvery HMRC-recognised Making Tax Digital app a UK landlord is likely to consider, with the cheapest MTD-capable plan, what it costs per year and who it suits.
• Cheapest HMRC-recognised MTD software for sole traders (2026)The lowest-cost ways for a UK sole trader to meet Making Tax Digital for Income Tax, from free business accounts to £5-a-month bookkeeping, with the catches spelled out.
• MTD bridging software vs full bookkeeping software: which do you need?Can you keep your spreadsheet under Making Tax Digital? How bridging software works, what it costs, and when full bookkeeping software is the better buy.
• Do you need a separate bank account for Making Tax Digital?MTD for Income Tax doesn't legally require a business bank account for sole traders or landlords. Here's why most people open one anyway, and the free options with MTD built in.