Making Tax Digital April 2027 | Wimborne Accountant

If you’re self-employed or you rent out property, and your income from those adds up to more than £30,000 a year, Making Tax Digital for Income Tax is heading your way. From 6 April 2027 you’ll need to keep digital records and send HMRC a short update every three months, instead of doing everything once a year. With a bit of planning over the next few months, it doesn’t need to be stressful. Here’s what it means for you, in plain English.

Who needs to use Making Tax Digital from April 2027?

According to HMRC, you’ll need to use Making Tax Digital for Income Tax if all of these apply:

you’re a sole trader or a landlord registered for Self Assessment
you get income from self-employment, property, or both
your “qualifying income” is over the threshold for the relevant tax year

The thresholds are being phased in:

Over £50,000 in the 2024 to 2025 tax year: you should have started from 6 April 2026
Over £30,000 in the 2025 to 2026 tax year: you’ll need to start from 6 April 2027
Over £20,000 in the 2026 to 2027 tax year: you’ll need to start from 6 April 2028

Partnerships will follow later; HMRC hasn’t set a date yet.

What counts as “qualifying income”?

This is the part that catches people out. Qualifying income is your total income from self-employment and property before expenses: your turnover, not your profit.

So if you’re a plumber in Ferndown with £22,000 of turnover and you also rent out a flat in Poole that brings in £10,000 a year, your qualifying income is £32,000. That’s over the £30,000 line, even if your actual profit is far lower.

A few things don’t count towards the threshold, including:

wages from a job (PAYE)
your share of profit from a partnership
dividends, including from your own limited company
State Pension and private pensions

If you own a rental property jointly, only your share of the income counts.

How will I know if it applies to me?

HMRC will look at your 2025 to 2026 Self Assessment tax return. That’s the one due online by 31 January 2027 (or 31 October 2026 if you still file on paper). If your qualifying income on that return is over £30,000, HMRC will write to you to say you need to start using Making Tax Digital from April 2027.

But don’t wait for the letter. HMRC is clear that if you don’t get one, it’s still your responsibility to check. Filing your 2025 to 2026 return early means you’ll know where you stand months before April.

What changes day to day?

Once you’re in, there are three main changes:

Digital records. You’ll keep records of your income and expenses in software that works with Making Tax Digital for Income Tax. HMRC publishes a list of compatible software on GOV.UK, and it’s always worth checking with the provider that it does what you need.
Quarterly updates. Every three months your software adds up your income and expenses and sends a summary to HMRC. These are summaries, not tax returns, and you don’t need to make accounting adjustments before sending them. If you use the standard quarters, the deadlines are 7 August, 7 November, 7 February and 7 May. So if you start in April 2027, your first update (covering 6 April to 5 July 2027) is due by 7 August 2027.
Your tax return. You’ll still do a final return after the end of the tax year, but through your Making Tax Digital software rather than the old way.

A nice bonus: after each update you can see an estimate of your tax bill so far, which makes budgeting easier.

What about penalties?

Under the new penalty points system, missing a quarterly update deadline gets you a point, and once you reach 4 points you’ll get a £200 penalty. Late tax returns get points too.

HMRC isn’t giving penalty points for late quarterly updates during the 2026 to 2027 tax year, but its guidance says points will apply after that. So if you’re starting in April 2027, don’t count on a grace period. It’s worth getting into the habit from day one.

How to get ready over the next few months

Here’s a simple to-do list for this winter:

Work out your qualifying income. Add up your self-employment and property turnover for 2025 to 2026.
Get your 2025 to 2026 tax return done early. The deadline is 31 January 2027, but there’s no reason to leave it that late. Our personal tax return service can take it off your hands.
Get your records into shape. If your paperwork lives in a shoebox, now’s the time to move to proper digital bookkeeping.
Choose your software. Make sure it’s on HMRC’s list of software that works with Making Tax Digital for Income Tax.
Decide how you want to sign up. You can sign up yourself, or your accountant can do it for you. You can also sign up voluntarily before you have to, which gives you a practice run.
Check whether you’re exempt. Some people can apply for an exemption, for example if you’re digitally excluded. If you are, you’ll carry on with a normal Self Assessment tax return.

Want the bigger picture? Have a read of our full Making Tax Digital guide.

Making Tax Digital from April 2027: what Wimborne, Poole and Bournemouth sole traders and landlords need to know