HMRC put out a plain message on 5 October: there are six months left before Making Tax Digital for Income Tax becomes compulsory for sole traders and landlords earning more than £30,000, and the department wants them signed up early rather than scrambling next March. The detail worth sitting with isn't the countdown. It's which figure HMRC actually tests to decide who's caught. The press release says it outright: turnover counts "gross income from self-employment and property before any tax allowances or expenses are deducted." That is a different number from the profit a sole trader or landlord pays tax on, and it will catch people who don't think of themselves as a £30,000 business at all.
The test is gross turnover, before anything comes off
From 6 April 2027, around 1,077,000 more sole traders and landlords will have to keep digital records and send HMRC quarterly updates through compatible software, on top of everyone already using the service since the £50,000 threshold went live in April 2026. HMRC's figure comes from its own analysis of 2024-25 Self Assessment returns, and the department is explicit that the number people need to check against is turnover, combining self-employment and property income, not what's left after costs. For a shop, a trade or a rental portfolio with thin margins, that's a meaningfully lower bar than "earning £30,000" suggests.
Take an illustrative landlord with two small rental flats, each bringing in £1,350 a month in rent. That's £32,400 a year in gross turnover before anything is deducted — already over the £30,000 line. Her actual costs for the year run to mortgage interest of £9,600, letting agent fees of £2,800, and insurance and repairs of £2,000, a total of £14,400. Her real taxable profit is £18,000. Plenty of landlords in that position would describe themselves as running an £18,000 side income, not a £30,000-plus business, and would be surprised to learn MTD applies to them from April 2027 regardless.
| Illustrative landlord, two rental flats | Amount |
|---|---|
| Gross rent (turnover test used by HMRC) | £32,400 |
| Mortgage interest, agent fees, insurance and repairs | £14,400 |
| Actual taxable profit | £18,000 |
| Caught by MTD for Income Tax from April 2027? | Yes |
What the admin actually involves
MTD for Income Tax doesn't change how much tax is owed. It changes how the figures reach HMRC. Instead of one Self Assessment return a year, someone in scope keeps digital records throughout the year and sends four quarterly updates through HMRC-recognised software, followed by an end-of-period statement and a final declaration to close the tax year — six submissions in total rather than one. The quarterly updates themselves are short running totals of income and expenses, not full tax calculations, but they do mean the record-keeping has to happen continuously rather than being reconstructed from a shoebox of receipts every January.
The people already over the £50,000 threshold are a live example of how that cycle runs. Having joined from 6 April 2026, they sent their first quarterly update, covering 6 April to 5 July 2026, by the 7 August deadline. Their second, covering 6 July to 5 October 2026, is due by 7 November 2026. Someone with turnover of £55,000 spread fairly evenly across the year would be reporting roughly £13,750 of income and expenses in that second update, through the same software used for the first one. Two more quarterly updates, an end-of-period statement and a final declaration will follow before that tax year is closed off.
What it means depending on where you sit
For a sole trader or landlord whose turnover is comfortably over £30,000 but whose profit margin is tight, the message is simple: check the gross figure, not the number you actually live on, because that's the one HMRC is using. For anyone running close to the £30,000 line either way, the sensible move is to check turnover on the 2025-26 return specifically, since that's the year HMRC will use to decide who's in scope from April 2027. For the group already over £50,000 and live in the system since April 2026, the next job is simply making sure the 7 November quarterly update goes in on time through the same software as the first one. For anyone currently under £30,000, there's no action required yet, but the threshold falls again, to £20,000, from April 2028, so it's worth watching rather than assuming this is someone else's problem long-term.
Signing up early, as HMRC is encouraging, isn't just about compliance goodwill. It buys time to pick compatible software properly and to get a first quarter's digital records right before anything is compulsory, rather than finding out in month one that a chosen package doesn't handle rental income cleanly or doesn't talk to a bank feed the way it needs to.
What to do this week
Check your 2025-26 turnover, combining self-employment and property income, against the £30,000 threshold — not your profit, and not a rough mental estimate, but the actual gross figure before expenses. If you're over it, sign up on GOV.UK now rather than waiting for the April 2027 deadline, so there's time to choose and test compatible software before quarterly reporting becomes mandatory. We've written before about what happened when HMRC started signing up the first wave of the £50,000 group, and the same practical lessons apply here a year earlier. Getting digital records set up correctly, for a sole trader or a landlord, before the first quarterly update is due is exactly what our Making Tax Digital service and our landlord accounting service are built to handle.
What's still uncertain, and when we'll know
HMRC hasn't yet published the detailed software and transition timetable for the over-£30,000 group in the way it did ahead of the £50,000 group's April 2026 start date, so some of the practical rollout detail is likely to firm up over the coming months rather than all at once. The department also hasn't confirmed the exact mechanics or timing of the further drop to a £20,000 threshold due from April 2028, beyond naming the figure and the year. What is fixed now: the £30,000 threshold itself, the 6 April 2027 start date, and the 1,077,000 estimate, all confirmed in HMRC's 5 October press release and based on its own analysis of 2024-25 Self Assessment data.