Making Tax Digital 2027: Are You in the Next Wave?

Making Tax Digital (MTD) for Income Tax is already a reality for many sole traders and landlords. From 6 April 2027, the rules expand to a further group — and there is a good reason to prepare before the new tax year begins.

HMRC is encouraging people who may be affected to check their position and get ready now.

Who comes into scope in April 2027?

The next phase generally applies to sole traders and landlords whose combined qualifying gross income from self-employment and property is more than £30,000, based on the relevant earlier tax return. For the April 2027 start, this is generally the 2025/26 tax return.

Gross income means income before deducting expenses, not taxable profit. If you have both self-employment and property income, the relevant amounts are combined. It is important not to assume that a profit below £30,000 puts you outside the rules.

What will change?

People within scope will need to keep digital records of relevant income and expenses using compatible software and send quarterly updates to HMRC. They will also complete their tax reporting through the MTD process.

This is a change to how records and information are maintained and submitted, not a requirement to pay Income Tax four times a year simply because quarterly updates are due.

What should you do now?

First, check your qualifying income and whether the rules apply to you. Next, review how you currently keep your records. If you rely on paper records or spreadsheets, ask what compatible software or bridging solution would suit you.

Then consider how regularly you record transactions. Moving to digital reporting is much easier when your bookkeeping is up to date rather than being tackled in one rush. Finally, speak to your accountant about registration, software and your reporting responsibilities.

Already using MTD? Your next deadline is 7 November

For those already required to use MTD for Income Tax from April 2026, the second quarterly update is due by 7 November 2026. This is a separate deadline from the April 2027 expansion.

Not everyone has the same reporting obligations, and exemptions may apply in particular circumstances. Check your individual position rather than relying on a headline threshold alone.

Why start before April?

Choosing software, setting up records and learning a new routine all take time. Getting comfortable with the process now means you can begin the next tax year with a system that works for you, instead of trying to catch up once deadlines are approaching.

The Exchange perspective

Exchange can help you check whether MTD for Income Tax applies, choose an appropriate digital approach and build a manageable bookkeeping routine. The aim isn’t just compliance; it’s clearer information throughout the year.

If you would like to talk through your business finances and plans, contact the team at Exchange Accountants.

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