MTD for Income Tax 2027 What Sole Traders and Landlords Need to Know
AccuCounts Pro Ltd | Tax News & Updates | October 2026
HMRC is urging more sole traders and landlords to get ready for Making Tax Digital for Income Tax, with the next major threshold taking effect from 6 April 2027.
From that date, individuals with more than £30,000 a year in qualifying self-employment and property income will need to keep digital records and send quarterly updates to HMRC using compatible software.
For many taxpayers, this will be a bigger change than it first appears. The move is not just about switching from paper records to software. It changes the rhythm of tax reporting from one annual Self Assessment return to regular digital submissions throughout the year.
Who will need to comply from April 2027?
Making Tax Digital for Income Tax is being introduced in phases. The start date depends on a person’s gross qualifying income from self-employment, property, or both.
Start date | Qualifying income |
6 April 2026 | Over £50,000 |
6 April 2027 | Over £30,000 |
6 April 2028 | Over £20,000 |
The key point is that the threshold is based on income before expenses, not taxable profit.
A sole trader with £36,000 of sales and £18,000 of costs may only have £18,000 of profit, but their qualifying income is still £36,000. That means they may fall within the April 2027 rules.
The same applies where income comes from more than one source. If someone earns £22,000 from self-employment and £10,000 from rental property, the figures are combined. Their total qualifying income would be £32,000.
This is likely to affect many people who do not think of themselves as high earners, including part-time landlords, tradespeople, consultants, online sellers, and people with a side business.
What will change for sole traders and landlords?
Under the new rules, affected taxpayers will need to keep their business and property records digitally using HMRC-compatible software.
They will also need to send quarterly updates to HMRC. These updates summarise income and expenses during the tax year. The figures do not replace the final tax position, but they give HMRC more regular information.
At the end of the tax year, taxpayers will still need to finalise their affairs. This year-end process confirms income, claims reliefs and allowances, makes any adjustments, and brings the tax position together.
In practical terms, this means sole traders and landlords will need to:
keep digital records of income and expenses
use software that works with HMRC’s system
submit quarterly updates on time
complete a year-end finalisation process
keep records organised throughout the year, not just before the Self Assessment deadline
For anyone used to gathering receipts once a year, this will feel like a significant shift. Good book keeping and accounting habits will become much more important.
Why the £30,000 threshold matters
The April 2027 phase is expected to bring many more taxpayers into the digital reporting system.
Those already using cloud accounting software may find the move easier. For others, there may be a learning curve. Landlords with spreadsheets, sole traders with paper records, and people who rely on bank statements at year end should start reviewing their systems well before April 2027.
Preparation matters because digital reporting is not something to set up at the last minute. Taxpayers may need time to:
choose suitable software
connect bank feeds, where appropriate
separate personal and business transactions
learn how to categorise income and expenses
check whether property and self-employment income are recorded correctly
agree responsibilities with their accountant or bookkeeper
Waiting until the first quarterly deadline creates avoidable pressure.
Concerns have been raised about the rollout
The Institute of Chartered Accountants in England and Wales has raised concerns about the pace of the rollout.
Figures highlighted in its Autumn Budget 2026 submission stated that around 436,000 taxpayers met the first quarterly reporting deadline in August 2026. This was reported as being significantly fewer than originally expected.
Accountants have also raised practical concerns around software readiness, taxpayer awareness, and the extra work involved in moving clients onto new systems.
That does not mean the requirements can be ignored. It does mean affected taxpayers should treat 2027 as a live planning issue, not a distant admin change.
How to start preparing now
The best first step is to check whether the rules are likely to apply.
Start with total gross income from self-employment and property. Do not deduct expenses when checking the threshold. If the combined figure is over £30,000, the April 2027 start date may apply.
Next, review how records are currently kept. If income and expenses are already recorded digitally, check whether the software is compatible with HMRC. If records are held on paper or in a basic spreadsheet, now is the time to look at suitable options.
It is also sensible to tidy up record keeping before the rules start. Separate bank accounts can make tracking easier, especially where there is a mix of personal spending, rental income, and business costs.
Sole traders and landlords in Worksop, Mansfield, Retford, Ollerton, Eckington, and across the UK should also speak to their accountant ahead of time. Early advice can help avoid software problems and missed deadlines later.
The main takeaway
The new £30,000 threshold from 6 April 2027 will bring many more sole traders and landlords into digital tax reporting.
The most important detail is that the threshold is based on gross income before expenses, and self-employment and property income are combined.
Anyone near or above the threshold should start preparing early. Check income levels, review record keeping, choose compatible software, and get advice before the first reporting deadline arrives.
This article is for general information only and should not be treated as personal tax advice.
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