HM Revenue and Customs (HMRC) has issued a warning to sole traders and landlords earning over £30,000 annually, urging them to register early for a major tax change that becomes mandatory on 6 April 2027.
From that date, Making Tax Digital for Income Tax will be extended to sole traders and landlords with a turnover above £30,000. HMRC said those who register early will have extra time to choose compatible software and prepare at their own pace.
Six months left to prepare
HMRC cautioned that just six months remain until sole traders and landlords with a turnover exceeding £30,000 will be obliged to use Making Tax Digital (MTD) for Income Tax.
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."
Who is affected and what to do
Officials stated that business owners must verify whether they meet the threshold, as turnover encompasses gross income from self-employment and property before any tax allowances or expenses are deducted. HMRC explained that early registration enables customers to ensure their MTD information is accurate from the outset and allows time to select the software that suits them best.
Agents can also register their clients through GOV.UK. From 6 April 2027, approximately 1,077,000 additional sole traders and landlords will be required to maintain digital records and utilise compatible software to submit quarterly updates of their income and expenses to HMRC, as well as complete their tax return, alongside those already using the service.
Quarterly updates and future expansion
The quarterly updates aren't extra tax returns, but brief summaries. HMRC stated that sorting it out now means sidestepping the last-minute scramble every January.
Making Tax Digital was introduced for sole traders and landlords earning over £50,000 in April this year. The threshold will drop further to £20,000 from April 2028, extending MTD for Income Tax to an even broader range of sole traders and landlords.
Customers can learn more about how Making Tax Digital for Income Tax works by watching HMRC’s customer journey video on YouTube.
