Six months, £30,000 and 1,077,000 people: the tax change coming for the self-employed
What happened
On 5 October 2026 HM Revenue and Customs (HMRC) urged sole traders and landlords earning more than £30,000 to start getting ready for Making Tax Digital for Income Tax. The reason is a date: 6 April 2027. From then, that group must keep digital records and use compatible software to send HMRC quarterly updates of their income and expenses, as well as to complete their tax return. HMRC estimates around 1,077,000 more sole traders and landlords will be brought in. That estimate comes from HMRC's analysis of 2024 to 2025 Self Assessment returns. There are just over six months to go. HMRC is encouraging people to sign up early on GOV.UK, so they can choose software and get used to the process before it becomes compulsory. Accountants and agents can sign up clients too. This follows the first stage, which began on 6 April 2026 for sole traders and landlords earning more than £50,000. That group's second quarterly update is due on 7 November. The threshold drops again to £20,000 from April 2028.
Why this matters
If you let out a property or work for yourself, this changes your admin from one annual push to something more regular. That sounds worse. HMRC's argument is that it is better, and there is something to it. The quarterly updates are not extra tax returns - they are short summaries. HMRC's point is that keeping records as you go removes the January scramble, where people spend days hunting for receipts from the previous spring. There is a catch worth naming. This is a genuine change in how you work, not just a new form. You will need software that HMRC recognises. If you currently keep your records in a shoebox or a spreadsheet you built yourself, that will no longer be enough on its own. The threshold detail also catches people out. Turnover here means gross income from self-employment and property, added together, before any tax allowances or expenses are deducted. So someone with £18,000 of rent and £15,000 of freelance income is over £30,000, even though their profit may be far lower. That is the single most important sentence in the announcement, and the easiest to miss.
What the evidence actually says
HMRC's figures and rules are specific, so it is worth setting them out plainly. The dates: MTD for Income Tax became mandatory from 6 April 2026 for those earning over £50,000. It extends to those over £30,000 from 6 April 2027, and to those over £20,000 from April 2028. The scale: around 1,077,000 additional sole traders and landlords join from April 2027, based on HMRC analysis of 2024 to 2025 Self Assessment returns. The mechanics: digital records, HMRC-recognised software, quarterly updates of income and expenses, plus the tax return. A list of compatible software is on GOV.UK. To sign up, you must be registered for Self Assessment and have submitted a tax return in the last two years. There are exemptions, including for people who are digitally excluded. That is a real route, not a theoretical one, and the details are on GOV.UK. 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." That 'already successfully using' claim is the one worth weighing. The £50,000 group has been in since April 2026, so there is real experience to draw on. If you know someone in that group, their account of how it went is probably more useful than any guidance note.
Practical advice
Six months is comfortable if you start now and uncomfortable if you start in March. First, work out whether you are in scope. Add your gross self-employment income and your gross property income for the year. Before expenses. Before allowances. If the total is over £30,000, April 2027 applies to you. Second, look at the compatible software list on GOV.UK before you buy anything. Prices and features vary a lot, and some options are built for landlords specifically. Third, consider signing up voluntarily now. HMRC's argument here is sound: you get to make mistakes while they do not matter, and you make sure your details are right from the start. Fourth, if you use an accountant, ask them this month rather than next spring. They can sign you up, and they will be far busier closer to the deadline. Fifth, if you genuinely cannot use digital tools - because of disability, age, location or lack of connectivity - look into the digital exclusion exemption rather than assuming you must struggle through. Sixth, start the habit now even without software. Photographing receipts as you get them and keeping a simple monthly log will make the switch far easier, whatever system you end up with. And if you are already in the £50,000 group, note that your next quarterly update is due on 7 November.
What to know
HMRC urged action on 5 October 2026 ahead of Making Tax Digital for Income Tax extending to sole traders and landlords earning more than £30,000 from 6 April 2027. Around 1,077,000 more people will be brought in, based on HMRC analysis of 2024 to 2025 Self Assessment returns. Turnover is measured as gross income from self-employment and property combined, before allowances or expenses - a detail that catches people out. Those affected must keep digital records, use HMRC-recognised software, and send quarterly updates of income and expenses as well as completing their return. Quarterly updates are short summaries, not additional tax returns. Signing up early is possible and encouraged, and agents can sign up clients. Exemptions exist, including for the digitally excluded. The threshold falls to £20,000 from April 2028. The £50,000 group's next quarterly update is due 7 November 2026. Sources: HM Revenue & Customs, "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, "Making Tax Digital for Income Tax", accessed 8 October 2026, https://www.gov.uk/guidance/using-making-tax-digital-for-income-tax ; HM Revenue & Customs, "Find software that works with Making Tax Digital for Income Tax", accessed 8 October 2026, https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax This article is for general information and does not replace advice from a doctor, pharmacist or other qualified healthcare professional.
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