Making Tax Digital from April 2027: What the £30,000 Threshold Means for You
If you are self-employed or you let property, the tax return you are preparing for 2025/26 decides something important. HMRC has confirmed that anyone whose qualifying income was over £30,000 in 2025/26 must use Making Tax Digital for Income Tax from 6 April 2027.
That brings in more than a million sole traders and landlords. The ones who come through it comfortably will be the people who find out where they stand this autumn, not in March.
Who needs to join in April 2027
The test is your qualifying income, and this is where most people get it wrong. It is your total income from self-employment and property before expenses, in other words your turnover and your gross rents, not your profit.
So a landlord collecting £18,000 in rent who also earns £14,000 from a small side business has qualifying income of £32,000, and is in, even if the profit on both is a fraction of that.
Some income does not count at all: your salary through PAYE, your share of a partnership’s profit, dividends and pensions. If you own a property jointly, only your share of the rent is included.
HMRC estimates that 1,077,000 people have qualifying income between £30,000 and £50,000. Around 798,000 are sole traders, 182,000 are landlords and 97,000 are both. The threshold then falls again, to £20,000, from April 2028.
Why your 2025/26 tax return matters now
HMRC will check your 2025/26 Self Assessment return and write to you if you are over the threshold. That letter is a courtesy, not a condition. If it never arrives, it is still your responsibility to check and sign up.
The return is due by 31 January 2027, but the earlier it is done, the sooner you know for certain which side of £30,000 you are on. That turns April from a surprise into something you have been preparing for since the autumn. It is one of the reasons we like to get Self Assessment returns prepared well ahead of the deadline.
One useful exception: if all your self-employment and property income stopped before 6 April 2026, you will not need to join. You do need to tell HMRC, though, or they may sign you up anyway based on the records they hold.
What changes once you are in
Three things change. Your records need to be kept digitally, in software that works with HMRC. You send a short quarterly update of your income and expenses, due by 7 August, 7 November, 7 February and 7 May. And your tax return is still due by 31 January after the tax year, sent through the same software.
We covered what a quarterly update actually involves in our guide to the first MTD quarterly deadline.
The detail that is easy to miss is penalties. People who joined in April 2026 were given a year’s grace, with no penalty points for late quarterly updates in 2026/27. The April 2027 group do not get that. From your first quarter, each missed update earns a penalty point. Reach four points and you are charged £200, and £200 again for every further missed deadline.
Late payment penalties change too. For 2027/28, tax still unpaid 15 days after the due date attracts a 4% penalty, with another 4% at day 30, then a further penalty at an annual rate of 10%, charged daily until it is paid. In your first year you get 30 days rather than 15 to pay or agree a payment plan, which is worth knowing but not worth relying on.
Five things worth doing before April 2027
- Work out your qualifying income from your 2025/26 figures, using turnover and gross rents rather than profit.
- Get your 2025/26 return prepared early, so you know where you stand months before April.
- Choose your software and start using it before you have to. Moving your record keeping over in the winter means your first real quarter is not also your first go with the software. Our bookkeeping team can set this up with you.
- Check whether an exemption applies, and how long it lasts. Being digitally excluded can qualify, but HMRC will not accept a preference for paper or being unfamiliar with software as a reason. Several of this year’s temporary exemptions, including for foster carers claiming qualifying care relief and farmers and creatives using averaging relief, end in April 2027.
- Decide who does what. Some clients keep their own records and have us check and submit; others hand the whole thing over. Either works, as long as it is settled before 6 April.
Getting ready with Modus
We are helping sole traders and landlords right across Oxfordshire prepare for Making Tax Digital now, whether you are looking for accountants in Oxford, in Banbury or in the towns in between. You can read more about how we help on our Making Tax Digital page or see everything we do on our services page.
If you think you might be over £30,000, a short conversation now will tell you where you stand and what to do next, while there is still plenty of time to do it calmly.