By Cat Hall Making Tax Digital Guide for sole traders: What to expect when MTD for IT thresholds reduce 3 Aug 2026 In 2027, sole traders and landlords with a qualifying income of £30,000 and over will have to comply with MTD. Here’s what that means for you. Making Tax Digital for Income Tax (MTD) is already here for sole traders and landlords with a qualifying income of £50,000 and over per year. But what happens when the thresholds reduce to £30,000? Who will be affected Who will be in scope? Landlords and sole traders (and their tax agents) are the ones affected by MTD. At the moment, only those with a qualifying income of £50,000 and over have to comply. However, from 6 April 2027, sole traders and landlords with qualifying income of £30,000 and over will join them. There’s no timeline yet, but at some point in future, Partnerships will also fall in scope. What is qualifying income? Qualifying income is gross income from self-employment and property income before any tax allowances or expenses are deducted. Who are the exceptions? People who are digitally excluded are exempt. This is where someone cannot reasonably be expected to use compatible software to keep digital records and send quarterly updates – likely due to age or disability. How to check if you’ll be mandated when thresholds fall HMRC will look at your total turnover from self-employment and property on your latest Self Assessment tax return only. If this is over the threshold, you will be expected to comply with MTD. Other types of income will not count towards qualifying income. Only those over the threshold have to comply with MTD. However, if you’re unsure of your figures or are close to the threshold, you could prepare by getting familiar with the software options available to you. If your income falls below the threshold after joining If your income falls below the threshold after you join, you’ll likely still be eligible for the scheme. That’s because the thresholds for MTD compliance will fall to £20,000 in April 2028. For most people, the only way to leave MTD will be to stop being self employed, or stop renting out property. So you’re eligible What changes for your reporting and record-keeping? Reporting deadlines 6 April 2027: Sole traders and landlords with qualifying income of £30,000 and over must comply. 7 August 2027: Deadline to submit your first quarterly update. 31 January 2028: Deadline to submit your end-of-year tax return for 2026/27, in the usual way as you won’t yet have enough quarterly entries in the MTD system. 7 February 2028: Deadline to submit your third quarterly update. 7 May 2028: Deadline to submit your fourth quarterly update. Record-keeping You must keep digital records of business income and expenses, using compatible software. Digital records should include: The amount of income/expense Date incurred/received Category of information: ie, income, expenses, tax adjustments. Software options From 6 April 2027, sole traders and landlords with qualifying income over £30,000 must use MTD software to digitise record-keeping. There are various approved software providers for MTD listed on GOV UK’s finder, which lets you factor in details such as your reporting period. Some of these are free. Preparing now: steps for individuals If MTD will apply to you, here’s how you can start getting ready now. Sign up in time Start using MTD-compatible software now to get used to the system Record income and expenses digitally using this software Be aware of quarterly update deadlines so you aren’t taken by surprise when the time comes. You should also keep an eye out for updates to MTD rules and deadlines. If you’re worried about MTD, our licensed accountants and bookkeepers can help you. How to sign up When the time comes, you or your tax agent will need to sign you up. If you don’t have a tax agent, use this GOV UK online service to sign up for MTD Tax agents with authorisation use this separate online service to sign up their clients. Cat Hall is Content Specialist at AAT.