MTD for Income Tax: what the April 2027 £30,000 threshold means for you
The £50,000 cohort has been filing since April 2026. The next group is larger, less prepared, and about eight months out. If your gross self-employment and property income topped £30,000 in 2025/26, this one is yours.
Last verified 31 July 2026. Prices are ex VAT and taken from each vendor’s own UK pricing pages. Promotional offers change roughly monthly and are normally for new customers only — check the live price before you subscribe.
From 6 April 2027, sole traders and landlords whose qualifying income was over £30,000 in the 2025/26 tax year must keep digital records and send HMRC four quarterly updates plus a final declaration each year. Qualifying income means gross self-employment income plus gross property income — turnover, not profit.
That is the whole rule in one paragraph. Everything below is the detail that decides whether it applies to you and what you should do about it before April.
It is worth saying plainly what most sites still get wrong. Making Tax Digital for Income Tax is not “coming in 2026”. It arrived in April 2026 for the over-£50,000 group, and those businesses are inside it now. The deadline that is still live — the one with time left on the clock — is the £30,000 one on 6 April 2027. That is roughly eight months from the date this article was verified.
Source: Fizoral research, verified 31 July 2026. Thresholds and dates are set by HMRC and can change — confirm on GOV.UK.
Who is caught by the April 2027 start?
You are caught if you are a sole trader or a landlord and your gross self-employment income plus gross property income came to more than £30,000 in the 2025/26 tax year.
Three things about that sentence do most of the work:
- It is combined. Self-employment and property are added together. Neither has to clear £30,000 on its own. A landlord with £18,000 of rent and £15,000 of freelance work is on £33,000 and is in.
- It is gross. Turnover before expenses, before allowances, before reliefs. Mortgage interest, letting agent fees, materials, mileage — none of it comes off the figure that decides your MTD position.
- It is a past tax year. 2025/26 has already finished. The number that decides this has already happened.
What does not count
Several common income types are excluded from qualifying income:
- Partnership income
- Dividends
- Savings interest
- PAYE employment income
- Pensions
So a designer earning £40,000 in a salaried job and £12,000 freelance on the side has £12,000 of qualifying income, not £52,000. The salary is irrelevant to the threshold.
The floor: £20,000
If your combined gross self-employment and property income is £20,000 or less, you are outside Making Tax Digital for Income Tax entirely. And if you have no qualifying income at all, you are outside scope and cannot join voluntarily even if you want to.
If you want to work through your own numbers rather than read the rule, use the MTD eligibility checker or read the longer breakdown at am I affected by Making Tax Digital?.
Why the 2025/26 tax year is the one that decides it
HMRC uses qualifying income from the 2025/26 tax year to decide who joins Making Tax Digital on 6 April 2027 — a year that has already ended, so your position is effectively already set.
This is the part people miss, and it changes what “preparing” means. You are not waiting to find out whether you are in. You can find out this afternoon by adding up two numbers from a year that is already closed.
The same pattern applies across the whole rollout: HMRC looks back one clear tax year before each start date.
| Start date | Threshold | Judged on qualifying income in | Status at 31 July 2026 |
|---|---|---|---|
| 6 April 2026 | Over £50,000 | 2024/25 | Already live — the first cohort is in it now |
| 6 April 2027 | Over £30,000 | 2025/26 | The live deadline — about eight months away |
| April 2028 | Over £20,000 | 2027/28 | Planned |
Verified 31 July 2026. HMRC sets these dates and thresholds and can change them. Confirm your own position on GOV.UK or with your accountant. The full timetable is on our MTD deadlines page.
The figure that decides whether you are in MTD in April 2027 is already sitting in your 2025/26 books. You are not forecasting. You are checking.Fizoral
Getting out again is harder than getting in
Once you are inside Making Tax Digital, a single quiet year does not release you. You have to be under the threshold for three consecutive tax years before you leave. Treat joining as a one-way door for planning purposes, and set your bookkeeping up as something you can live with for years rather than something you will unwind in twelve months.
What actually changes when you are in MTD
Two things change: your records must be kept digitally, and you send HMRC four quarterly updates during the tax year plus a final declaration afterwards, instead of one Self Assessment return.
The frequency is the headline, but it is not the hard part for most people. The hard part is that the records behind those updates have to be digital and kept up to date through the year. A shoebox reconciled every January stops working, because you are reporting in the middle of the year, not eleven months after it.
What a quarterly update is not: it is not a tax bill, and it is not a mini tax return. We have written a separate piece on exactly what goes into one — see what you actually submit in an MTD quarterly update.
Do not take filing dates from a blog
Quarterly period ends and filing deadlines are set by HMRC. We are not restating specific submission dates here because getting one wrong would cost you money. Take those directly from GOV.UK or from your accountant.
Not tax advice — confirm with HMRC or your accountant
This article is general information for UK businesses, not tax advice. Making Tax Digital thresholds, dates and rules are set by HMRC and can change. Before you act on anything here, confirm your own position on GOV.UK or with a qualified accountant.
What to do with the months you have left
Work through four steps: confirm your 2025/26 qualifying income, pick software and start using it now rather than in April, get one clean quarter of practice in, and agree with your accountant who is doing what.
- Add up your 2025/26 gross self-employment and property income. One number, before expenses. If it is over £30,000 you are in from 6 April 2027. If it is £20,000 or under you are out entirely. In between, read the detail on who MTD applies to.
- Choose software now, not in March. The worst version of this is signing up in the last fortnight and learning the tool while your first live quarter is running. Our best UK accounting software guide ranks the four main options on what they cost over 24 months.
- Run a full practice quarter before April. Connect the bank feed, categorise everything, reconcile to the end. If something is going to break — a bank feed that will not connect, a category structure that does not fit your trade — you want to find out with no deadline attached.
- Settle the division of labour. If you use an accountant, agree in writing who submits the quarterly updates and who submits the final declaration, and what that costs. Quarterly reporting changes the shape of the work, and some fee structures were not written with it in mind.
- Do not let the discount decide it. Every vendor is running an introductory offer, and every one of them expires. Price the whole 24 months before you commit — see the accounting software discount cliff.
If you are still on spreadsheets
You are not automatically stuck. Bridging software can sit between a spreadsheet and HMRC, and for a small, stable landlord that can be enough. For most people it is a worse deal than moving properly. We have set out both sides in moving from spreadsheets to accounting software before MTD.
Choosing software: MTD compatibility is not the deciding factor
Every major UK accounting package — Xero, QuickBooks, FreeAgent and Sage — is on HMRC’s recognised list. MTD compatibility is table stakes. Choose on what the software costs you over 24 months and on whether it fits how you work.
Vendors market MTD readiness as though it were a feature they alone have. It is not. If a mainstream UK package could not handle Making Tax Digital it would not be a mainstream UK package. Once you stop using that as a filter, the real differences show up — and most of them are about price after the introductory discount ends.
Here is what the entry plans cost across 24 months, ex VAT, once each promotion has expired:
- —FreeAgent via NatWest, RBS, Ulster Bank or MettleFree permanently while you hold the account. Mettle requires one transaction a month.£024 months
- —Sage Sole Trader FreeGenuinely free, but capped at 5 invoices a month and non-VAT only£024 months
- 1QuickBooks Sole Trader£10/mo, 90% off for 6 months. Cannot file VAT.£18624 months
- 2Xero Ignite£16/mo, 80% off for 6 months£307.2024 months
- 3Sage Accounting Start£18+VAT/mo, 3 months free£37824 months
- 4FreeAgent Sole Trader£19/mo, 50% off for 6 months£39924 months
All figures ex VAT, verified 31 July 2026. Sage quotes +VAT; we normalise to ex VAT so the comparison is like for like. Promotions change roughly monthly and are normally for new customers only.
Two of those cost us money to tell you, and we are telling you anyway: QuickBooks is £121.20 cheaper than Xero over 24 months, and FreeAgent is free forever if you bank with NatWest, RBS, Ulster Bank or Mettle. If you bank with one of those, start there — see how to get FreeAgent free.
One caveat that catches sole traders out: QuickBooks Sole Trader cannot file VAT. If VAT registration is anywhere on your horizon, read registering for VAT? Your software choice just changed before you commit, because the cheapest option stops being the cheapest option.
Vendor pricing pages, if you want to check us: Xero UK · QuickBooks UK · FreeAgent · Sage UK.
April 2027 MTD questions, answered
Short answers to the questions we are asked most about the £30,000 cohort.
Who has to start MTD for Income Tax in April 2027?
Sole traders and landlords whose qualifying income was over £30,000 in the 2025/26 tax year must use Making Tax Digital for Income Tax from 6 April 2027. Qualifying income means gross self-employment income plus gross property income — turnover, not profit.
Is the £30,000 threshold based on profit or turnover?
Turnover. Qualifying income is gross self-employment income plus gross property income, added together before any expenses, allowances or reliefs. A landlord with £18,000 of rent and £15,000 of freelance invoices has £33,000 of qualifying income and is over the threshold, even if very little of it is profit.
Which tax year decides whether I am caught by the April 2027 start?
The 2025/26 tax year. HMRC looks at qualifying income reported for 2025/26 to decide who joins from 6 April 2027. That year has already ended, so the figure that decides your position is largely fixed — it is on the Self Assessment return you file for 2025/26.
What income does not count towards the £30,000 threshold?
Partnership income, dividends, savings interest, PAYE employment income and pensions are excluded from qualifying income. Only gross self-employment income and gross property income count.
I am under £20,000 in total. Am I in MTD at all?
No. Combined gross self-employment and property income of £20,000 or less puts you outside Making Tax Digital for Income Tax entirely. People with no qualifying income are outside scope and cannot join voluntarily.
Once I am in MTD, can I leave if my income falls?
Not immediately. Once you are in, you must be under the threshold for three consecutive tax years before you can leave. One quiet year does not take you back out.
Do I need special software, or will any accounting package do?
You need software on HMRC’s recognised list, but that is not a useful way to choose between the major UK packages. Xero, QuickBooks, FreeAgent and Sage are all on the recognised list. MTD compatibility is table stakes, not a differentiator — choose on cost over 24 months and on fit instead.
Read next
Up to the pillar for the full picture, across for the mechanics, down for what to actually buy.
Up — pillar
Making Tax Digital for Income Tax: the full guide
The complete picture: who is in, when, what you file and what changes. Start here if this article was your first contact with MTD.
Across — sibling post
What you actually submit in an MTD quarterly update
Four updates and a final declaration, demystified. What is in an update, what is not, and why it is not a tax bill.
Across — sibling post
Moving from spreadsheets to accounting software before MTD
Bridging software versus moving properly, what each costs, and how to migrate without losing your history.
Down — what to buy
Best accounting software for UK sole traders
The sole trader shortlist, priced over 24 months rather than over the introductory discount.
Down — review
Xero review: Ignite at £16 a month
What £307.20 over 24 months buys you, where Xero is worth the premium and where it plainly is not.
Down — head to head
Xero vs QuickBooks
£307.20 against £186 over 24 months, and the VAT restriction that can wipe the difference out.