Finance Matters Insights
Making Tax Digital for Income Tax: The £30,000 Threshold From April 2027
If you are a sole trader or landlord and received more than £30,000 in qualifying income during the 2025/26 tax year, the way you report your income to HMRC is changing in less than six months.
From 6 April 2027, Making Tax Digital for Income Tax will become mandatory for the next group of sole traders and landlords.
This is one of the biggest changes to Self Assessment in years, so here is what you need to know and how to prepare.
💡 Who is this for?
You will need to use Making Tax Digital for Income Tax from 6 April 2027 if you:
- Are a sole trader or landlord registered for Self Assessment
- and received more than £30,000 in qualifying income during the 2025/26 tax year
Qualifying income means your total income from self-employment and property before expenses are deducted. In other words, the threshold is based on turnover, not profit.
It also combines your different sources of qualifying income.
For example, if you received £24,000 from self-employment and £8,000 in rental income, your qualifying income would be £32,000. You would therefore fall within Making Tax Digital from April 2027, even though neither source exceeded £30,000 on its own.
HMRC will use the information reported on your 2025/26 Self Assessment return, due by 31 January 2027, to assess whether you need to join. They should write to you if you meet the criteria, but it remains your responsibility to check and prepare even if you do not receive a letter.
💻 What will actually change?
Making Tax Digital does not mean paying Income Tax four times a year. Instead, you or your accountant will need to use HMRC-compatible software to:
- Create and maintain digital records of your business income and expenses
- Send quarterly summaries to HMRC
- Complete your tax return through the software after the end of the tax year
The quarterly submissions are summaries of your income and expenses, not four additional tax returns. HMRC will not receive every individual invoice or receipt, but the underlying records must be kept digitally. If you have more than one self-employed business or also receive property income, a separate quarterly update will be required for each source.
The standard quarterly deadlines will be:
→ 7 August
→ 7 November
→ 7 February
→ 7 May
You will still need to complete your end-of-year tax return and pay the tax due by 31 January following the end of the relevant tax year. The payment deadline is not being brought forward.
📌 What to do over the next six months
Start by checking your total self-employment and property income for the 2025/26 tax year. Remember to use your gross income before expenses rather than your taxable profit.
If your qualifying income exceeded £30,000 during the 2025/26 tax year:
- Make sure you are registered for Self Assessment and submit your 2025/26 return by 31 January 2027
- Speak to your accountant about how they will manage Making Tax Digital on your behalf
- Choose compatible accounting or bridging software if you manage your own records
- Start keeping your income and expenses digitally before the new tax year begins
- Sign up for Making Tax Digital before 6 April 2027
Free and paid software options are available, as well as bridging software for those who prefer to continue using spreadsheets.
Certain exemptions are available, including for people who are digitally excluded, but these depend on individual circumstances and may require an application to HMRC. The main change is not how much tax you owe, but how frequently your financial information needs to be organised and reported.
Six months is enough time to prepare, but this is not something to leave until the first quarterly deadline approaches.
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F
Fisayo Martins
Founder at Finance Matters UK
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