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1,077,000 more people are being moved onto quarterly tax reporting. The threshold is £30,000

Qurexa Editorial Team6 October 20266 min read 0 0
1,077,000 more people are being moved onto quarterly tax reporting. The threshold is £30,000

What happened

On 5 October 2026, HM Revenue and Customs published a reminder aimed at sole traders and landlords earning more than £30,000 a year. The message was simple: act now, because the rules change for you in April. The change is the next stage of Making Tax Digital for Income Tax, usually shortened to MTD. It is already running. From April 2026, people with a qualifying income above £50,000 had to join. From 6 April 2027, the threshold drops to £30,000. From April 2028 it drops again, to £20,000. HMRC says around 1,077,000 additional sole traders and landlords will be required to join from April 2027. One detail trips a lot of people up. The threshold is based on turnover, not profit. That means gross income before you take off expenses or allowances. Somebody with £34,000 of rental income and £12,000 of costs is over the threshold, even though their taxable profit is well under it. If you are affected, the practical changes are: you must keep your records digitally, send HMRC a quarterly update through compatible software, and finalise your tax position at the end of the year digitally rather than through the familiar self assessment form alone. Craig Ogilvie, HMRC's Director of Making Tax Digital, said that hundreds of thousands of sole traders and landlords are already successfully using Making Tax Digital, and that now it is time for the next group to get ready.

Why this matters

For most people reading this, the honest answer is that it does not. If you are employed and taxed through PAYE, nothing here applies to you. But over a million households are about to find that something they do once a year, usually in a rush in January, becomes something they do five times a year. That is a genuine change to how your admin works, and the people most likely to be caught out are the ones least likely to be reading tax news: someone letting out one inherited flat, a self-employed cleaner or gardener, a part-time dog walker who also has a job. The £30,000 turnover threshold is lower than many people assume. A single property let at £650 a month is £7,800 a year, which is nowhere near. But two modest properties, or one property plus some self-employed work, can get you there quickly, because the incomes are added together. The second reason it matters is timing. April 2027 sounds comfortably distant in October 2026, and it is not, because the work is not the first quarterly update. The work is getting your records into a form the software can read. People who leave that until March find out in March that their shoebox of receipts is not a digital record.

What the evidence actually says

A few things are worth being precise about, because MTD has attracted a lot of confused commentary. Quarterly updates are not four extra tax returns. They are summaries of income and expenses, submitted from your software. You are not calculating your tax bill four times a year, and you are not paying it four times a year. Payment dates are unchanged by MTD itself. The qualifying income test uses gross income from self-employment and property combined. HMRC is explicit that turnover means income before expenses or tax allowances. The thresholds step down on a published schedule: £50,000 from April 2026, £30,000 from April 2027, £20,000 from April 2028. If you are under £20,000 you are outside MTD for Income Tax for now. There are exemptions. HMRC provides for people who are digitally excluded — for example because of a disability, age, remoteness of location or religious belief that makes using digital tools impracticable. This is an application, not an automatic status, and it is worth looking into early if it might apply to you. On the practical side, HMRC notes that existing users have their second quarterly update due on 7 November. That is a useful marker of how the rhythm actually works once you are in it. What we cannot tell you is whether the software will cost you money. Some compatible products are free for simple affairs and others are not, and the choice depends on whether you have property income, self-employment income or both.

Practical advice

If you think you might be over £30,000 of turnover from self-employment and property combined: - Work out your gross figure now, for the 2025/26 tax year, before expenses. That is the number that matters. If it is anywhere near £30,000, assume you are in. - Check the GOV.UK list of compatible software before you buy anything. Several packages are designed for exactly this, and a few are free at the simplest level. Do not take a salesperson's word that a product is compatible. - Start keeping digital records from the beginning of a tax year rather than mid-way through. It is far less painful. - If you use an accountant, ask them this month what they want you to do. Accountants are much happier helping in October than in March, and some will set the software up for you as part of their normal fee. - If you are digitally excluded, look at the exemption route early. Applications take time. - Be alert to scams. Tax changes always bring a wave of fake texts and emails. HMRC will not ring and demand immediate payment, and it will not ask for bank details by text. GOV.UK has a page specifically for checking whether an HMRC text message is genuine, and it was updated on 5 October 2026. One more thing worth knowing: if your income is below the threshold you can still join voluntarily. Some people find quarterly summaries easier than one annual scramble, and signing up early means doing it calmly.

What to know

From 6 April 2027, sole traders and landlords with qualifying income above £30,000 must use Making Tax Digital for Income Tax. HMRC says around 1,077,000 more people will be brought in at that point. The threshold is turnover, not profit — gross income before expenses or allowances — and self-employment and property income are added together. Being in MTD means keeping digital records, sending quarterly updates through compatible software, and finalising your tax position digitally. Quarterly updates are summaries, not four tax returns, and they do not change when you pay. The threshold falls again to £20,000 from April 2028. Exemptions exist for people who are digitally excluded, but you have to apply. The useful thing to do this month is work out your gross figure and check the compatible software list. Sources: HM Revenue & Customs / GOV.UK, 'Sole traders and landlords earning more than £30,000 urged to act now', 5 October 2026, https://www.gov.uk/government/news/sole-traders-and-landlords-earning-more-than-30000-urged-to-act-now ; HM Revenue & Customs / GOV.UK, 'Check if a text message you've received from HMRC is genuine', 5 October 2026, https://www.gov.uk/guidance/check-if-a-text-message-youve-received-from-hmrc-is-genuine ; GOV.UK, 'HM Revenue & Customs', https://www.gov.uk/government/organisations/hm-revenue-customs This article is for general information and is not financial, tax or legal advice. For your own circumstances, speak to a qualified accountant or tax adviser, or contact HMRC directly. It also does not replace advice from a doctor, pharmacist or other qualified healthcare professional.

#making tax digital#self-employed#landlords#hmrc#money#small business

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