Making Tax Digital: Will the £30,000 Rule Affect You?

Written by Al Baker | Founder & Editor, The Penny Pincher - Last updated: the 6th of October 2026

If you run a small business or rent out a property, you may be used to gathering your figures for one annual Self Assessment tax return. From the 6th of April 2027, Making Tax Digital for Income Tax will bring more sole traders and landlords into a system of digital records and quarterly updates. The next entry threshold is more than £30,000 of qualifying income, but that means business and property income before expenses, rather than the profit you keep or your salary from a job.

That difference could bring someone with a modest profit into the rules while leaving someone with a higher salary outside this particular test. For example, £32,000 of business sales with £12,000 of expenses still gives you £32,000 of qualifying income, even though the profit is £20,000. With six months until the next start date, it’s worth checking the right figure before spending money on software or assuming the change doesn’t affect you.

This guide provides general tax information, not advice tailored to your circumstances. Check the linked HMRC guidance and ask HMRC or a qualified tax adviser if you’re unsure how a rule applies to you. The details below were checked on the 6th of October 2026.

Who has to use Making Tax Digital from April 2027?

The April 2027 entry test uses qualifying income for the 2025/26 tax year, which ran from the 6th of April 2025 to the 5th of April 2026. Sole traders and landlords above £30,000 must join from the 6th of April 2027 unless an exemption applies. HM Revenue & Customs, the UK tax authority usually shortened to HMRC, estimates around 1.077 million additional people will enter at that stage.

The first group, with qualifying income above £50,000 in 2024/25, should already have started from the 6th of April 2026. The threshold then falls to more than £20,000 from the 6th of April 2028, using 2026/27 qualifying income. These are separate entry dates, so check which year applies rather than treating next April as the start for everyone.

This guide concerns Making Tax Digital for Income Tax, rather than the separate VAT reporting rules. If you’re already using MTD, a lower income in one later year doesn’t automatically let you leave. Use the official eligibility guidance and your circumstances to establish your position before changing how you report.

What counts towards the £30,000 threshold?

Qualifying income combines gross income from your self-employment and property, before expenses or tax allowances are deducted. PAYE employment income, pensions and dividends don’t count towards this particular threshold. That doesn’t mean those other sources are tax-free; it means they aren’t included in this test for entering MTD.

If you earn £24,000 from your business and receive £8,000 in gross rental income, the combined figure is £32,000. If instead you have a £35,000 salary and £10,000 from your own business, the qualifying figure is £10,000, rather than £45,000. The examples below assume you aren’t already required to use MTD and don’t have an exemption or another circumstance that changes the calculation.

Exactly £30,000 doesn’t cross a threshold defined as more than £30,000. If your accounting period covers less or more than a full year, or you have jointly owned property, there are additional calculation rules to check. HMRC’s qualifying-income guide explains those cases, so don’t rely only on the amount arriving in your bank account.

You also need to keep this separate from deciding whether you should register for Self Assessment in the first place. Our side-hustle tax guide explains the wider reporting questions for money earned outside a job. Being below the MTD threshold doesn’t mean you can ignore an existing tax-return obligation.

What changes under Making Tax Digital?

You’ll need to keep the required income and expense records digitally and use compatible software to send summaries to HMRC during the year. There are quarterly updates for each relevant self-employment or property business, followed by an annual tax return through compatible software. The updates are summaries, rather than four full tax returns, and they don’t replace the year-end work of finalising your tax position.

For someone who currently gives an accountant a folder of receipts once a year, the practical change is having a process for recording and sharing the information more regularly. A sale, business purchase or rental payment needs to find its way into the digital records used by your software. Agree who will do that work, and who will check and submit the figures, before the first deadline approaches.

Do you have to buy accounting software?

HMRC doesn't provide its own MTD filing software, but both free and paid compatible options are available. Free products may have limits, such as a maximum number of transactions or support only for simpler tax affairs. Check whether a product covers your income sources, quarterly updates and annual return before choosing it on price alone.

You may be able to keep using spreadsheets with suitable bridging software, which connects your digital records to the MTD service. The Low Incomes Tax Reform Group’s record-keeping guide explains how this can work. A spreadsheet on its own isn’t a way to send the required updates, so check that the complete setup meets the rules.

Use HMRC’s software finder to narrow down the options, then compare what’s included and any ongoing cost. If you already pay for a bookkeeping package or use an accountant, ask whether your existing arrangement can cover MTD. You might need a change of process rather than an entirely new service, but don’t assume an old annual-return fee covers quarterly work.

When are the quarterly MTD deadlines?

For standard tax-year reporting, the first update for someone starting in April 2027 is due by the 7th of August 2027. Each update covers the tax year so far, as set out in HMRC’s quarterly-update guidance. Your second update therefore includes income and expenses from April to October, rather than reporting only July to October.

There’s also an option for calendar update periods, ending in June, September, December and March, with the same submission deadlines. Your accountant or software provider can help establish which option fits your records. These reporting dates don’t move the normal Self Assessment payment deadlines, so keep your tax-payment plan separate from the update reminders.

What if you already use an accountant?

An authorised accountant or tax agent can handle MTD tasks for you, including signing you up. You’ll still need an arrangement that gets the required information into digital records and submitted on time. Ask who will maintain those records, what you’ll need to supply and whether the quoted fee includes the quarterly updates and annual return.

If you receive a new quote, compare the whole service rather than just the software subscription. One package might include regular bookkeeping support, while another expects you to enter and categorise everything yourself. Knowing that difference in advance should help you choose something you can afford and realistically keep up with.

Can you be exempt from Making Tax Digital?

Some exemptions are automatic and others require an application. Digital exclusion can apply where it isn’t reasonable for someone to use the required software because of their age, health or disability, qualifying religious beliefs, or lack of practical internet access. Simply preferring paper records, being unfamiliar with accounting software or facing extra time and cost isn’t enough on its own.

People who expect to need MTD from April 2027 can apply now for a digital-exclusion exemption. There are also exemptions linked to particular tax circumstances, and some are temporary, so don’t assume an exemption for this year continues indefinitely. If you’re exempt from MTD, your normal Self Assessment reporting and record-keeping duties still apply.

What should you do before April?

Start with your 2025/26 qualifying income and use the official checker to establish whether the April 2027 rules apply to you. If they do, decide who’ll keep the records, choose a compatible setup and arrange the sign-up before the start date. You can then put the quarterly deadlines in your calendar and agree any accountant handover dates early enough to avoid a last-minute rush.

Don’t wait for a letter as your only check, because you’re still responsible for establishing whether you need to join. A little preparation now could prevent paying for software that doesn’t fit or discovering too late that your annual accountancy service needs changing. The aim is to get a workable routine in place before the 6th of April, rather than leaving everything until the first August deadline.

Frequently asked questions

Does my salary count towards the £30,000 Making Tax Digital threshold?

No, PAYE salary isn’t included in the qualifying-income test. The relevant figure combines gross self-employment and property income before expenses.

Is the £30,000 threshold based on profit or turnover?

It’s based on qualifying gross income before expenses, rather than the profit you keep. Income from self-employment and property is combined where both apply.

Does exactly £30,000 trigger the April 2027 rules?

The threshold is more than £30,000, so exactly £30,000 doesn’t cross it. If you’re already in MTD or have other relevant circumstances, check your existing obligations separately.

Do I have to send four full tax returns each year?

No, the quarterly updates are summaries of income and expenses, not full tax returns. You still need to complete the annual return through the MTD process.

When is the first quarterly update due for the April 2027 group?

For standard tax-year reporting, the first deadline is the 7th of August 2027. It covers the period from the 6th of April to the 5th of July 2027.

Can I keep using a spreadsheet?

A spreadsheet can form part of a suitable setup when connected through compatible bridging software. Check that the products you use together meet the digital-record, quarterly-update and annual-return requirements.

Can my accountant submit MTD updates for me?

Yes, an authorised agent can handle MTD tasks on your behalf. Agree what you need to provide and whether their fee includes the quarterly updates as well as the annual return.

Can I get an exemption from MTD?

Some exemptions are automatic and others need an application, including digital-exclusion cases. Check HMRC’s current rules, as exemptions can depend on your circumstances and may be temporary.