MTD for Income Tax April 2027: A Six-Month Plan

If your self-employment and property income was over £30,000 in the 2025/26 tax year, you must use Making Tax Digital for Income Tax from 6 April 2027. The six months between now and then are enough to prepare calmly — but only if you start with your records, not with the software.

The first MTD cohort, for people with qualifying income over £50,000, went live on 6 April 2026. The second cohort is much bigger, pulling in many sole traders, drivers, tradespeople and landlords who have only ever filed one tax return a year. This guide sets out a month-by-month plan to be ready.

Key takeaways

• The £30,000 test uses gross income from self-employment and property in 2025/26, not profit.
• Your 2025/26 tax return, due by 31 January 2027, is the figure HMRC will look at.
• From 6 April 2027 you keep digital records and send quarterly updates using compatible software.
• The threshold falls again to £20,000 (based on 2026/27 income) from 6 April 2028.
• Switching to digital records before April lets you practise without deadline pressure.

What "qualifying income" means

Qualifying income is the total of your gross self-employment income and gross property income for the tax year, before expenses. Employment income, pensions, savings interest and dividends are not included. If you have two small businesses and a rental flat, their takings are added together. HMRC explains the test on GOV.UK's MTD for Income Tax eligibility page, and our guide to who is in MTD and from when covers the edge cases.

The three MTD phases at a glance

What changes on 6 April 2027

Once you are in, three things change. You keep your business and property records digitally, in software or in spreadsheets linked to bridging software. You send HMRC a summary of income and expenses every quarter. And instead of a traditional tax return, you finish the year with a final declaration, due by 31 January after the tax year ends. Our article on quarterly update deadlines sets out each date.

Quarterly updates do not mean paying tax four times a year. Your payment dates — 31 January and 31 July — stay the same. What changes is how often you report, and HMRC's late submission penalties work on a points-based system, so missed quarters add up.

Your six-month preparation checklist

1. October 2026 — check your number. Add up your gross self-employment and property income for 6 April 2025 to 5 April 2026. If it is close to £30,000, get the 2025/26 figures finalised properly rather than guessing.
2. November 2026 — file your 2025/26 return early. You have until 31 January 2027, but filing early confirms your position and gives you time to act on it.
3. December 2026 — choose software. Pick a product from HMRC's list of compatible software that suits how you work: phone app, desktop or spreadsheet plus bridging tool.
4. January 2027 — separate your money. A dedicated bank account for the business, linked to the software, removes most manual entry.
5. February 2027 — start keeping digital records. Run the new system for the last two months of 2026/27 so the habits are formed before it is compulsory.
6. March 2027 — sign up and diarise. Sign up for MTD for Income Tax through GOV.UK or through an agent, then put 7 August 2027 and the other quarterly deadlines in your calendar.

Our guide to MTD digital records explains what counts as a digital record and what a digital link is.

Software or spreadsheets: choosing your set-up

There are two broad routes. Full accounting software keeps your records, links to your bank, categorises transactions and sends the quarterly updates itself. It suits most people starting from paper or a shoebox of receipts. Bridging software connects an existing spreadsheet to HMRC, which can suit someone who already keeps a well-organised spreadsheet and does not want to change how they work.

Whichever you choose, check that it handles every income source you have — for example both a business and a rental property — and that it lets an accountant access it if you want help. Some products are designed for simple businesses and landlords; others are built for more complex records. Trying a product during the free or practice period, before April, is the best way to see whether it fits your routine.

Worked example (illustrative example)

"Priya", an invented illustrative example, is a self-employed mobile hairdresser who also lets out a small flat. In 2025/26 her hairdressing takings were £22,000 and her gross rent was £10,800. Her profit from each is much lower once costs are deducted, so she assumed MTD would not apply to her.

Her qualifying income, however, is £22,000 plus £10,800, or £32,800. That is over £30,000, so she must use MTD for Income Tax from 6 April 2027. She files her 2025/26 return in November 2026, chooses an app that handles both the business and the property, and runs it from February 2027. By the time her first quarterly update is due on 7 August 2027, she has already produced two practice quarters. The figures are invented; your own position depends on your income sources.

Common mistakes

• Testing profit instead of turnover. Expenses do not reduce qualifying income.
• Forgetting rental income. Property income is added to self-employment income.
• Waiting for a letter. Do the calculation yourself rather than relying on HMRC to tell you.
• Buying software before sorting records. Clean, separate records matter more than which app you pick.
• Thinking quarterly means paying quarterly. Payment deadlines are unchanged.

Get MTD ready without the stress

Our MTD compliance service starts from £49 per month and covers software set-up, quarterly updates and your final declaration. If your records need attention first, our bookkeeping service starts from £150 per month.

Unsure whether you are over £30,000, or want someone to handle the switch? Talk to us or compare our pricing.