Making Tax Digital for Income Tax: Are You Ready for April 2027?
Updated: 4 hours ago
If you're a sole trader or a landlord, the way you report your income to HMRC is changing. Making Tax Digital for Income Tax (often shortened to MTD) has already started for people with the highest incomes, and from 6 April 2027 it will apply to many more self-employed people and landlords. Here's what you need to know, in plain English, and what you can do now to get ready.
What is Making Tax Digital for Income Tax?
Instead of pulling everything together once a year for your Self Assessment tax return, MTD asks you to:
keep your business and property records digitally, using HMRC-compatible software
send a short summary of your income and expenses to HMRC every three months (a "quarterly update")
submit your end-of-year tax return through the same software
The quarterly updates aren't tax returns and you don't pay tax with them. They're summaries that give HMRC (and you) a running picture of how your year is going. Your tax is still worked out and paid in the usual way at the end of the year.
Who has to use it, and when?
MTD applies to sole traders and landlords who are registered for Self Assessment, based on their qualifying income. That's your total turnover from self-employment plus your gross rental income, before expenses. It's not your profit. HMRC is bringing people in over three stages:
From 6 April 2026: qualifying income over £50,000 in the 2024 to 2025 tax year
From 6 April 2027: qualifying income over £30,000 in the 2025 to 2026 tax year
From 6 April 2028: qualifying income over £20,000 in the 2026 to 2027 tax year
So if you're a self-employed tradesperson turning over £35,000, or a landlord collecting £2,700 a month in rent, the April 2027 date is the one that matters to you. Your 2025 to 2026 tax return, due by 31 January 2027, is the one HMRC will use to decide. If you're over the threshold, HMRC will write to you to confirm you need to sign up.
Partnerships aren't included yet. HMRC has said they'll be brought in later, with the timetable still to be confirmed.
The quarterly deadlines
Most people will use the standard tax-year quarters. Each update covers the year to date, and is due by the 7th of the month after the quarter ends:
6 April to 5 July: due 7 August
6 April to 5 October: due 7 November
6 April to 5 January: due 7 February
6 April to 5 April: due 7 May
You'll still need to submit your final tax return, with any adjustments and other income, by 31 January after the end of the tax year, just as you do now.
What about penalties?
MTD uses a points-based system for late submissions. For each missed deadline you get a point, and once you reach four points you'll get a £200 penalty. The good news is that HMRC has said it won't give penalty points for late quarterly updates during the first year, 2026 to 2027. Late tax returns still count, though, and it's best to get into good habits from the start.
How to get ready for April 2027
Check your qualifying income. Add up your self-employed turnover and your gross rents for 2025 to 2026. If the total is over £30,000, you're likely to be in.
Choose your software early. Spreadsheets on their own won't be enough. You'll need software that works with HMRC, or "bridging" software that links your spreadsheet to HMRC. Getting it set up a few months early gives you time to practise.
Separate your business finances. A dedicated bank account for your business or rental property makes digital record keeping much easier, and many software packages can pull your transactions in automatically.
Get into a quarterly routine. Set aside time every three months to check your figures. You'll also find it easier to plan for your tax bill, with no nasty surprises in January.
Talk to your accountant. We can tell you whether you need to join, help you choose the right software, and send your quarterly updates for you.
How A&MPG can help
At A&MPG, we've helped sole traders, landlords and small businesses in Sheffield since 1996. We can set up your software, keep your records in order and handle your quarterly updates and final return, so you can get on with running your business. Find out more about our Making Tax Digital service.
Not sure if MTD applies to you? Book a free consultation with Mark or Andrew, or call us on 0114 274 7759, and we'll talk you through it.
This article is general guidance based on HMRC information available in November 2026. Rules can change, so please get advice on your own circumstances.
