Earning over £30,000? What to do before MTD starts in April 2027
Making Tax Digital for Income Tax reaches sole traders with income over £30,000 from April 2027. Here's how to check whether that's you, and what to get in place this winter.
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10/14/20263 min read
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Earning over £30,000? What to do before MTD starts in April 2027
Making Tax Digital for Income Tax started in April 2026 for sole traders and landlords with income over £50,000. The next group joins on 6 April 2027, and it's a much bigger one: anyone with income over £30,000.
If that might be you, the next few months are the time to get ready. Here's what to check and what to do.
Does this apply to you?
You'll need to use MTD from 6 April 2027 if your qualifying income was over £30,000 in the 2025/26 tax year - the year you're about to file a return for.
Qualifying income means your total income from self-employment and property, before expenses. It's your turnover, not your profit. Income from a job taxed through PAYE doesn't count towards it.
So if you invoiced £34,000 in 2025/26 and had £12,000 of expenses, your profit is £22,000 but your qualifying income is £34,000. MTD applies to you.
Not sure if MTD applies to you? Our MTD checker will tell you in a few quick questions.
How will you know?
HMRC checks your qualifying income when you file your 2025/26 Self Assessment return, which is due by 31 January 2027. If you're over the threshold, it will write to you.
Don't wait for the letter though. HMRC is clear that it's your responsibility to check. If you file in late January, a letter won't leave you much time before April.
What actually changes?
Three things:
You keep your income and expense records digitally, in software or a spreadsheet
You send HMRC a quarterly update through MTD-compatible software
You submit your tax return through software too, by 31 January as now
The quarterly updates are due by 7 August, 7 November, 7 February and 7 May. Each one is a running total of your income and expenses for the tax year so far, not a full set of accounts, and your software does most of the work. If you join in April 2027, your first update is due by 7 August 2027.
What doesn't change: how much tax you pay, and when you pay it.
What about penalties?
HMRC isn't giving penalty points for late quarterly updates during 2026/27, the first year of MTD. Its guidance says that after that, points apply, and four points means a £200 penalty. So if you're joining in April 2027, don't count on a practice year.
What to do this winter
1. Check your 2025/26 turnover
You'll be adding it up for your tax return anyway. If it's over £30,000, or close, plan on MTD applying to you.
2. Choose your software
You don't have to spend much. Free options include Pie Tax, TaxNav, Sage Sole Trader's free plan and Zoho Books' free plan. If you'd rather stay on a spreadsheet, bridging software such as VitalTax sends your figures to HMRC for you. Our post on the best MTD software for sole traders compares them, and Can I use a spreadsheet for Making Tax Digital? explains the bridging route.
3. Sort out your bank account
A separate business account makes digital records far easier, because most accounting software can pull your transactions in automatically. See our Business Banking directory if you don't have one yet.
4. Start before you have to
Start keeping your records in your chosen software from January or February. By the time your first real update is due in August, you'll already know how it works.
5. Sign up
Once your software is ready, you sign up for MTD for Income Tax on GOV.UK. Doing it yourself, in good time, means you can check your details are right.
What if you can't use software?
You can apply to HMRC for an exemption if it isn't practical for you to use digital tools, for example because of age, disability or where you live. If HMRC agrees, you carry on filing a Self Assessment return as normal.
What if you're under £30,000?
You're not affected in April 2027. But the threshold drops again to £20,000 from April 2028, and that's based on your income in 2026/27 - the tax year we're in now. If you're earning over £20,000 this year, you have about 18 months.
One thing at a time
MTD sounds like a lot, but for most sole traders it comes down to this: keep your records in software and press a button four times a year. Check your turnover, pick a tool and give yourself a few months to get used to it.
You can compare every HMRC-recognised option in our MTD Software directory. Our post on Making Tax Digital for Income Tax covers the basics if you're new to it.
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