Earning over £30,000 as a sole trader or landlord? Making Tax Digital starts in April 2027

The short answer: From 6 April 2027, Making Tax Digital applies to sole traders and landlords whose self-employment and property income was over £30,000 in 2025/26. That's income before expenses, not profit. You'll keep digital records and send HMRC a short summary every 3 months. Your tax is still due by 31 January.

The quick version

• On 5 October 2026, HMRC urged people with income over £30,000 to sign up now.

• The test uses your turnover, so £30,000 of income can be in scope even if your profit is much lower.

• From April 2027 you'll need compatible software and four quarterly updates a year.

• Quarterly updates are summaries, not extra tax returns, and they don't add extra tax payments.

• The threshold drops to £20,000 in April 2028.

Do I need to use Making Tax Digital if I earn over £30,000?

Probably, yes, if that money comes from self-employment, property or both. On 5 October 2026, HMRC said Making Tax Digital for Income Tax will extend to sole traders and landlords earning more than £30,000 from 6 April 2027. It expects around 1,077,000 more people to join.

The test looks back a year. According to HMRC's guide to who needs to use it and when, it's based on your income for the 2025/26 tax year. That's the return most people send by 31 January 2027.

The table assumes you're a sole trader or landlord registered for Self Assessment and not exempt.

Partnerships don't need to use it yet. HMRC says it will set out a timeline for them later.

Does the £30,000 count my turnover or my profit?

It counts your turnover. HMRC calls this qualifying income: your total income from self-employment and property before you take off any expenses.

Some income doesn't count towards the £30,000:

• wages from a job taxed through PAYE

• your share of profit from a partnership

• dividends, including from your own company

• your State Pension or other pension income

If you co-own a rental property, only your share of the rent counts. And if you started trading part way through the year, HMRC may scale your income up to a full year.

Example: two people near the line

These numbers are made up to show how the test works.

• Sam, a photographer, invoices £34,000 and spends £12,000 on kit and travel. Sam's profit is £22,000, but the turnover is over £30,000, so Making Tax Digital applies.

• Priya earns £18,000 from tutoring and £14,000 in rent from a flat. Neither is over £30,000 on its own, but together they make £32,000. HMRC adds them up, so Priya is in too.

If you also have a salary, our guide to being employed and self-employed at the same time explains how the two fit together.

What will I actually have to do from April 2027?

You'll keep digital records and send HMRC a quarterly update every 3 months for each business you have. Then you'll finish the year with a tax return, as now.

A quarterly update is a running total of your income and expenses for the year so far. HMRC says it's a summary, not a tax return. You don't need to make any accounting or tax adjustments first. If nothing came in or went out, you still send one.

For your first Making Tax Digital year, 2027/28, the dates look like this:

These are the standard update periods. If your accounts run from 1 April to 31 March, you can pick calendar periods instead, with the same deadlines.

Before that, you'll still send your 2026/27 tax return in the usual way by 31 January 2028.

Record keeping can be simpler than it sounds. If a business has turnover under £90,000, sole traders only need to record whether each transaction is income or an expense. Landlords with residential property need a little more detail. You still keep your usual records, like invoices and bank statements.

Think of it as showing your working four times a year, instead of all at once in January.

When do I need to sign up for Making Tax Digital?

Before 6 April 2027, and HMRC is asking people to sign up now. Signing up early gives you time to pick software and check your details are right.

To sign up, you need to:

1. be registered for Self Assessment

2. have sent a tax return in the last 2 years

3. use the same user ID and password you use for Self Assessment

4. have your business name, address and type of work ready if you're a sole trader

You can also volunteer before you have to. If you sign up for the current tax year, you'll need to send any quarterly updates you've missed so far.

HMRC will write to you if your return shows you're over the limit. But HMRC is clear that if no letter arrives, it's still your job to check. If you have an accountant, they can sign you up instead.

How much will Making Tax Digital cost me?

That depends on the software you choose. HMRC doesn't provide its own software, so you'll use a product from a private company.

HMRC's guide to choosing software says free products are available for people with simple tax affairs. They may have limits, such as a cap on how many transactions you can record. HMRC doesn't recommend any product, but you can use its software finder to see options that fit your income sources.

For people with income between £30,000 and £50,000, the government's policy paper estimated an average one-off cost of £350 and an extra £110 a year. That's an average across businesses. If you already use digital tools, it says your costs may be lower.

Like spreadsheets? You can keep them, but you'll need "bridging" software to link them to HMRC.

What happens if I miss a quarterly update?

You'd get a penalty point. Under the new penalty rules, each missed quarterly update or tax return deadline adds one point. At 4 points, you get a £200 penalty, and another £200 for each deadline you miss after that.

You may have read that late quarterly updates aren't penalised. That only applies to the 2026/27 tax year, which is the first year for the over-£50,000 group. It won't cover you in 2027/28. That's worth knowing now, so the first deadline on 7 August 2027 doesn't catch you out.

There's some good news on payments. In your first year under the new rules, you have 30 days after the due date to pay or set up a payment plan before a late payment penalty starts. Points below the 4-point limit also drop off after 24 months.

Can I avoid Making Tax Digital?

Only if your income is under the limit or you qualify for an exemption. If you're exempt, you still send a normal Self Assessment return.

• Income of £20,000 or less: you're exempt automatically.

• Digitally excluded: you can apply for an exemption if it isn't reasonable for you to use software. Reasons include age, health, disability, religious beliefs or having no internet access where you live.

• What won't work on its own: HMRC won't accept being unfamiliar with software, having only a few records, or the extra time or cost as the only reason.

Once you're in, you can choose to leave if your qualifying income stays under the threshold for 3 tax years in a row. Remember the threshold falls to £20,000 in April 2028, though, so staying under it gets harder.

What can I do in the next six months?

There's no need to rush, but a few small checks now will make April much calmer.

1. Add up your 2025/26 self-employment and property income before expenses.

2. Use HMRC's checker in its guide to who needs to use it to confirm your start date.

3. Choose software, or agree with your accountant who will do what.

4. Sign up and connect your software to HMRC.

5. Put 7 August 2027 in your calendar, and keep 31 January for your tax bill.

Our step-by-step guide to Making Tax Digital for sole traders goes into more detail. You can also see your key dates and an estimate of your bill with the sole trader tax and deadline planner.

Still got questions?

Is Self Assessment quarterly now? Not quite. You send quarterly summaries, but the tax return at the end of the year is still the one that settles your bill.

Will I pay tax every quarter? No. Quarterly updates don't create new tax payments. You still pay by 31 January, plus payments on account if they apply to you.

Can I do Making Tax Digital on my own? Yes. You can sign up, choose software and send updates yourself, or ask an accountant to do it for you.

Does my salary count towards the £30,000? No. PAYE wages from a job don't count. Only self-employment and property income before expenses does.

What if I didn't get a letter from HMRC? You may still need to use it. HMRC says it's your responsibility to check, even without a letter.

Will I see what I owe during the year? After each quarterly update, you can see an estimate of your tax bill in your software or HMRC online account.