MTD for Income Tax April 2027: What the £30,000 Threshold Means for You

Affiliate disclosure: Some links on this page are affiliate links. If you click through and purchase, we may earn a commission at no extra cost to you.

Why April 2027 Is Closer Than It Looks

If your self-employment or property income sits between £30,000 and £50,000, MTD for Income Tax April 2027 is your start date, and the income that decides it has already been earned.

That is the part that catches people out. You are not being assessed on what you earn between now and April 2027. You are being assessed on your 2025/26 income, from the tax year that ended on 5 April 2026. The return for that year is due by 31 January 2027, and once HMRC has it, your position is set.

The first phase of Making Tax Digital for Income Tax went live on 6 April 2026 for people with qualifying income above £50,000, so this is no longer a future programme with movable dates. It is running, the software is in the market, and the second cohort has one tax year left to prepare.

What MTD for Income Tax Requires

Digital Records

You must keep digital records of the transactions behind your qualifying income, in software that can talk to HMRC’s systems. A paper cashbook does not comply. A spreadsheet can form part of a compliant system if you use bridging software to make the submissions, though dedicated accounting software is usually less work over a full year.

HMRC does not supply its own software for MTD for Income Tax. Everything has to come from the recognised list of commercial products.

Quarterly Updates, and Why They Are Cumulative

You send four quarterly updates a year for each business or property source. They are summaries of income and expenses rather than mini tax returns, and the deadlines are fixed: 7 August, 7 November, 7 February and 7 May.

The detail most people get wrong is that updates are cumulative. Each one runs from the start of the tax year to the end of the current quarter, not just the three months since the last submission. Your second update covers 6 April to 5 October, your third covers 6 April to 5 January, and so on. The practical effect is forgiving: a mistake in the first quarter corrects itself when you file the second, because you are restating the year to date rather than amending an old return.

Standard update periods run 6 April to 5 July, 6 April to 5 October, 6 April to 5 January and 6 April to 5 April. You can elect for calendar quarters instead, ending 30 June, 30 September, 31 December and 31 March, which keeps the same four deadlines and effectively gives you five extra days.

The Final Declaration

After the four updates comes the Final Declaration, which replaces the Self Assessment return and is due by 31 January as before. This is where you make your adjustments, claim reliefs and confirm the year’s position.

There is no separate End of Period Statement. An earlier version of the MTD design had one, and it was removed following the 2023 Autumn Statement, with its functions folded into the Final Declaration before mandation began. If you read an article or a software page that still refers to EOPS, it is describing a system that was abandoned before it launched.

One more point that trips up people already using MTD for VAT: the Final Declaration goes through MTD-compatible software, not HMRC’s existing Self Assessment portal, and being signed up for MTD for VAT does not sign you up for MTD for Income Tax. They are separate registrations.

Who the April 2027 Threshold Catches

The Tax Year That Decides It

For the April 2027 cohort, the test year is 2025/26, the year that ran from 6 April 2025 to 5 April 2026. If your gross qualifying income for that year was above £30,000, you are in from 6 April 2027.

HMRC works this out from your 2025/26 Self Assessment return, which is due by 31 January 2027. By the time the confirmation letter arrives, you may have two months or less before your obligations start, which is why the useful preparation window is the one you are in now.

The same logic applies further out. The April 2028 phase, at £20,000, is tested on your 2026/27 return, the year you are currently trading through.

What Counts as Qualifying Income

Qualifying income is gross, before expenses. It is your self-employment turnover plus your property income, added together where you have both. Someone with £18,000 of self-employment turnover and £14,000 of rental income has £32,000 of qualifying income and is in the April 2027 cohort, even though their profit after costs might be a fraction of that.

Employment income, dividends and savings interest do not count. Where you own property jointly, only your share counts.

That gross test is the trap. A landlord with a large mortgage or a trader with high material costs can be well inside MTD while making very little money.

If You Are Near the Line

If your 2025/26 qualifying income was £28,000, April 2027 does not catch you, but April 2028 may, depending on your 2026/27 figures. There is little point in waiting to find out. The software and the habits are identical either way, and the year you spend getting used to them is the year that makes the difference.

What to Do During 2026/27

Confirm your position. Add up gross self-employment income and gross property income for 2025/26. If the total is above £30,000, you are in. If you have not filed that return yet, filing it promptly settles the question rather than leaving it hanging.

Choose your software. This is the decision that shapes everything else. Check any product against HMRC’s published list of software compatible with MTD for Income Tax before you commit, because compatibility with MTD for VAT is not the same thing.

The options most relevant to sole traders and small landlords, with current list prices excluding VAT:

• QuickBooks Sole Trader Plus at £10 a month, with Simple Start at £16 for those who need fuller accounting. The old QuickBooks Self-Employed product no longer exists in the UK.
• FreeAgent at £19 a month for sole traders, and free for NatWest, RBS, Ulster Bank and Mettle business account holders. The Mettle route requires at least one transaction a month to keep it free.
• Xero from £16 a month on Ignite, rising to £37 on Grow for businesses that need more room.
• Sage, which offers a free Sole Trader plan, with Sage Accounting at £20 a month for businesses with employees.
• Zoho Books, which has a free tier that prepares and files a Self Assessment return, with paid plans from £10 a month billed annually. The free tier has a turnover limit that varies between sources, so check it against your own figures.
• Coconut, built specifically for sole traders and landlords, which appears on HMRC’s list with both free and paid versions. Check current pricing on their site.

Introductory discounts are heavy in this market and they expire. Compare on the list price you will be paying in month seven, not the headline on the banner.

Get your records digital now. The worst version of April 2027 is learning new software, entering months of back transactions and making a first submission at the same time. Whatever you choose, start running your bookkeeping through it during 2026/27 while nothing is riding on it.

Consider signing up voluntarily. You can join MTD for Income Tax before your mandation date if your income is below the threshold, provided you are not automatically exempt or outside the scope of the regime altogether. Doing so gives you real submissions to practise on. Penalty treatment differs for voluntary users, so check the position with your accountant or your software provider before you sign up rather than after.

Talk to your accountant. If you use one, tell them you expect to be in the April 2027 cohort so you can agree software, how a quarterly rhythm changes your working relationship, and what it does to their fees. If you do not use one and your affairs are more involved, with several income sources, property with mortgage interest, or capital allowances, the transition year is a sensible point to get advice.

Penalties: What Applies to the April 2027 Cohort

Late submission penalties work on points. Each late quarterly update earns one point, four points triggers a £200 penalty, and every further late submission after that adds another £200. Points drop off after two years if you do not reach the threshold.

HMRC announced a soft landing for the first mandated year, 2026/27, under which no penalty points are issued for late quarterly updates. It is understood that this concession is limited to the first cohort and will not extend to those mandated from April 2027 or April 2028. Plan on the basis that your first quarterly update, due 7 August 2027, counts.

Two things the soft landing never covered, for anyone: the Final Declaration, which attracts the usual Self Assessment penalties if it is late, and late payment of tax, which runs on its own separate regime of escalating charges and interest. Nothing about MTD changes when your tax is due.

FAQ

My income varies. What if I am above £30,000 in 2025/26 but below it later?

Once you are in, you stay in. You can only leave after your qualifying income has been below the threshold for three consecutive tax years, and then only by notifying HMRC. The threshold that applies to the exit test is the one for the cohort you entered under, so someone mandated at £30,000 tests against £30,000 even after later thresholds drop.

Do I need separate software for my business and my rental property?

Not usually. Many products handle multiple income sources in one account and submit separate quarterly updates for each, but the capability varies, so confirm it with the provider before you buy rather than assuming.

I am a landlord with no business. Does this apply to me?

Yes. Property income is qualifying income in exactly the same way. If your gross rental income for 2025/26 was above £30,000, you are in from 6 April 2027, with the same digital record-keeping and the same four quarterly updates.

I already use MTD for VAT. Am I set up?

No. Approval for MTD for VAT does not carry across to MTD for Income Tax. It is a separate sign-up, and your software needs to be recognised for Income Tax specifically.

What if I started trading after April 2025 and have no 2025/26 return?

The threshold test relies on a filed return, so a business with no 2025/26 figures is not picked up by the standard April 2027 test. HMRC has separate rules for new businesses, and if you started recently it is worth confirming your position with an accountant rather than assuming you are outside the regime indefinitely.

MTD for Income Tax April 2027: The Bottom Line

The deadline is close and the income that decides your position is already in the past. If your gross self-employment or rental income was above £30,000 in 2025/26, the work to do is straightforward: confirm the figure, pick software that is on HMRC’s Income Tax list, move your records into it during 2026/27, and get comfortable with cumulative quarterly updates before one of them counts.

The people who find April 2027 hardest will be the ones who wait for the letter. The ones who find it easy will have spent a quiet year making it routine.

Always check current MTD dates, thresholds and requirements on GOV.UK before acting, as the detail can change.

This article is general information about UK tax rules, not advice, and it does not take account of your circumstances. Thresholds, deadlines and penalty rules change, and software prices and plan names change more often still. Prices quoted exclude VAT and were correct at the time of writing. Speak to a qualified accountant or tax adviser, and confirm current pricing with the provider, before acting on anything here.