HM Revenue and Customs (HMRC) is urging sole traders and landlords with a turnover of more than £30,000 to sign up now for its new Making Tax Digital (MTD) service, warning that there are just six months until it becomes mandatory for reporting Income Tax.
The tax office is encouraging eligible individuals to register on GOV.UK and start preparing immediately. They should check whether they meet the threshold, as turnover includes gross income from self-employment and property before any tax allowances or expenses are deducted.
Early sign-up benefits
Signing up early means customers can make sure their MTD details are correct from the start and have time to choose the software that works best for them. Agents can also sign up their clients via GOV.UK.
From April 6, 2027, around 1,077,000 more sole traders and landlords will need to create digital records and use compatible software to send HMRC quarterly updates of their income and expenses and to complete their tax return, in addition to those already using the service, HMRC warns.
Quarterly updates explained
The quarterly updates are not additional tax returns, but short summaries which the tax office uses to track tax information through the year. By creating digital records throughout the year, sole traders and landlords can save hours previously spent gathering information at tax return time, helping them spend more time focusing on their business and avoiding the last-minute rush every January, HMRC says.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, said: “Hundreds of thousands of sole traders and landlords are already successfully using Making Tax Digital and now it’s time for the next group to get ready. Signing up now means you can prepare and familiarise yourself with the process before it becomes mandatory next April.”
Threshold changes
Last year, the rule was set at £50,000 but has now been lowered to £30,000 from next April, and then £20,000 from April 2028. MTD for Income Tax became mandatory for sole traders and landlords earning more than £50,000 from April 6, 2026.
To sign up, customers must be registered for Self Assessment and have submitted a tax return in the last two years.
