What do sole traders earning over £30,000 need to do for Making Tax Digital?

If your 2025-26 self-employment and property turnover, before expenses, was over £30,000, Making Tax Digital starts for you on 6 April 2027 unless exempt. Sign up, get software, keep digital records and send your first update by 7 August 2027.

Making Tax Digital for Income Tax (MTD) means keeping your business records in software, sending HMRC a short update every quarter and filing your tax return through that software. HMRC said on 5 October 2026 that around 1,077,000 more sole traders and landlords will need to use it from 6 April 2027.

Which income counts

HMRC's test is your qualifying income: your self-employment income and any property income added together, before expenses. GOV.UK calls this turnover. It is not your profit. Wages from a job, dividends, the State Pension, private pensions and a share of partnership profit are left out.

For an April 2027 start, the year that counts is 2025-26. Your online tax return for that year is due by 31 January 2027. HMRC says it will write to you if you are over the line, but you must still check your own figure if no letter comes. The qualifying income guide has more detail.

A worked example: a £34,000 trade

A self-employed plasterer's 2025-26 return shows £34,000 of sales and £11,000 of costs. They also earn £6,000 from a part-time job.

Their profit is £23,000, but profit is not the test. Their turnover of £34,000 is over £30,000, so MTD starts for them on 6 April 2027. While their sales stay under £90,000, they can choose to record only whether each item is income or an expense.

Steps to take, and by when

1. By 31 January 2027: file your 2025-26 tax return and add up your sales and any rent before expenses. The free MTD check shows which start date applies to you.
2. Before you sign up: check whether an exemption applies (see below). If you need to apply for one for April 2027, GOV.UK says you can apply now.
3. Choose compatible software. It must create, store and correct your digital records, send quarterly updates and file your tax return. HMRC does not recommend any product. A spreadsheet works if it is digitally linked to bridging software. See our guide to MTD software for sole traders.
4. Sign up on GOV.UK. You must be registered for Self Assessment and have sent a tax return in the last 2 years. Have your Self Assessment user ID and password, your business name, address and trade, and your start date if it was in the last 2 tax years. Our sign-up guide walks through it.
5. From 6 April 2027, keep digital records. Each record needs the amount, the date and a category, made as close to the transaction as possible. Keep them for at least 5 years after the 31 January deadline for that year.
6. Send four quarterly updates by 7 August 2027, 7 November 2027, 7 February 2028 and 7 May 2028. You need one for each business, even for a quarter with no income or costs.
7. By 31 January 2029: file your 2027-28 tax return through MTD software, adding any other income such as bank interest.

If you would rather not do the updates yourself, our guide on who can do your quarterly updates sets out the options.

Your 2027-28 dates

Each update covers the tax year so far. If your accounts run from 1 April to 31 March, GOV.UK says to use calendar periods ending 30 June, 30 September, 31 December and 31 March, chosen in your software before your first update. The deadlines stay the same. More on this in our quarterly deadlines guide.

What this means for you

Four update deadlines come on top of the 31 January tax return, so keep your records as you go. Your tax is still paid on the same dates, because a quarterly update is a report, not a bill.

At the Budget on 28 October 2026 the government said people who must join in April 2027 will get no penalty points for late 2027-28 quarterly updates, though you must still send them. A late 2027-28 tax return still earns a point, and from 2028-29 so does each missed update. At 4 points HMRC charges £200, plus £200 for each later miss. For late payment, your first year gives you 30 days to pay or set up a payment plan. Miss that, and 2027-28 tax is charged 4% at day 15, 4% at day 30, then 10% a year. The MTD penalties guide explains how points clear.

Exemptions and ways out

• Automatic exemptions: qualifying income of £20,000 or less, no National Insurance number before the tax year starts, or a 2024-25 return saying you are not physically or mentally able to deal with HMRC and have a power of attorney or deputy, among others.
• Exempt for 2026-27 only: people whose 2024-25 return included averaging relief, qualifying care relief, or the SA107 or SA109 pages. They must use MTD from 2027-28 if their 2025-26 qualifying income was over £30,000, unless the next point applies.
• Exempt until further notice: the 28 October 2026 Budget named people eligible for qualifying care relief (such as foster carers), non-UK resident entertainers and sportspeople, and people expected to be non-resident.
• Exempt beyond April 2027: ministers of religion, Lloyd's members, and people receiving or transferring Married Couple's Allowance or Blind Person's Allowance.
• Digitally excluded: you can apply if age, health, disability, religious belief or lack of internet access makes using software unreasonable. Unfamiliar software, time or cost is not enough on its own.
• Leaving later: if your qualifying income drops below the threshold for 3 tax years in a row, you can opt out.

Those exemptions are automatic when your 2024-25 return showed the claim or page. If you expect it only on a later return, you must apply. Partnerships do not need MTD yet. See can I be exempt from MTD for how to apply, and our trades guides.