From April 2027, sole traders and landlords with qualifying income of more than £30,000 from self-employment and property will be required to use Making Tax Digital (MTD) for Income Tax. Those affected will need to keep digital records and send quarterly updates to HMRC using compatible software.
Rollout expands after first stage
The change comes as HMRC continues the first stage of the rollout, which started in April this year for sole traders and landlords with qualifying income of more than £50,000. More than 570,000 people had signed up to the service by August, with 436,000 successfully submitting their first quarterly update.
HMRC also confirmed it would begin signing up people who should already be using MTD but had not yet joined the service themselves from September. The process is taking place in stages over the coming months.
What are the new HMRC rules from April?
Making Tax Digital for Income Tax is currently mandatory for sole traders and landlords with qualifying income of more than £50,000. That threshold will fall to more than £30,000 from April 2027, bringing another group of taxpayers into the system.
People affected by MTD need to keep digital records and use HMRC-recognised software to provide quarterly updates containing summaries of their income and expenses. HMRC stresses that the quarterly updates are not additional tax returns and says they should take only minutes to complete using compatible software.
The existing Self Assessment deadline of January 31 will also remain in place. Quarterly updates do not replace Self Assessment. HMRC says people covered by MTD will need to submit their quarterly updates to be able to submit their tax return.
New £200 penalty rules from April
People already covered by MTD have been given a soft landing during the first year of the new system. HMRC will not issue penalty points for late quarterly updates during the 2026/27 tax year, although existing penalties can still apply for late tax returns and late tax payments.
That changes from April 6, 2027, when the points-based penalty system for missed quarterly deadlines begins. A taxpayer will receive one penalty point each time they miss a quarterly deadline. Once they accumulate four points, they will receive a fixed £200 penalty. Points can subsequently expire following a period of compliance.
Some people may be exempt from Making Tax Digital
HMRC says various exemptions from Making Tax Digital are available, including for people who are digitally excluded. Quarterly updates must otherwise be submitted using software recognised by HMRC.
Craig Ogilvie, HMRC's Director of Making Tax Digital, previously urged people affected by the current rollout to take action themselves rather than wait for HMRC. He said signing up directly allows people to ensure their MTD details are correct and gives them time to choose suitable software.
The expansion from April means people with qualifying income of more than £30,000 will become the next group required to follow the new digital reporting rules.
