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

Turnover. It's your gross self-employment income plus your gross rents, before any expenses come off, so you can be over £30,000 even if your profit is far lower.

Does my salary count towards the £30,000?

No. PAYE employment income, pensions, dividends and partnership profit shares don't count, only self-employment and property income. Your salary is still taxed as normal and still goes on your tax return.

When is my first quarterly update due?

7 August 2027, for the period from 6 April 2027 to 5 July. The next ones are due 7 November 2027, 7 February 2028 and 7 May 2028, then your tax return by 31 January 2029.

Will I get a penalty if an update is late in my first year?

Not a penalty point, going by the Budget on 28 October 2026: people who join in April 2027 won't get points for late quarterly updates in the 2027 to 2028 tax year. You still have to send every update before you can file your tax return, a late tax return still earns a point, and paying late is charged separately.

Do I have to pay for MTD software?

No. 14 of the 30 standalone tools we track can be used for free, and several business bank accounts include MTD software at no extra cost. Free options usually have limits, so check one fits before you rely on it.

Making Tax Digital from April 2027: who's in and what to do

From 6 April 2027, Making Tax Digital for Income Tax covers sole traders and landlords with qualifying income over £30,000. HMRC estimates that's around 1,077,000 more people. If you're one of them, you'll keep digital records, send HMRC a short update every quarter, and file your tax return from software. Here's how to tell if you're in, and what to do before April.

Are you in?

HMRC decides using your 2025 to 2026 tax year, the return that's due by 31 January 2027. If your qualifying income for that year was over £30,000, you'll need to use MTD for Income Tax from 6 April 2027.

Qualifying income is your self-employment and property income added together, before expenses: your turnover and your gross rents, not your profit. If you own a property jointly, only your share counts. Your PAYE salary, pensions, dividends and any share of partnership profits don't count towards it. HMRC's qualifying income guide has worked examples.

Over £50,000 in the 2024 to 2025 tax year? Then you joined in April 2026 and should be using it already. Under £30,000? The threshold drops to £20,000 from April 2028, so it's worth knowing what's coming.

Your first year, date by date

When	What happens
31 January 2027	Deadline for your 2025 to 2026 tax return. This is the year HMRC uses to decide whether you're in.
Before 6 April 2027	Choose HMRC-recognised software and sign up. You can sign up early.
6 April 2027	Start keeping digital records of your income and expenses.
7 August 2027	First quarterly update, for the period to 5 July.
7 November 2027	Second update, for the period to 5 October.
7 February 2028	Third update, for the period to 5 January.
7 May 2028	Fourth update, for the period to 5 April.
31 January 2029	Your 2027 to 2028 tax return, sent from your software.

You can opt for calendar quarters instead (periods ending 30 June, 30 September, 31 December and 31 March); the deadlines stay the same. More in quarterly updates, explained.

No penalty points for late updates in your first year

The Budget on 28 October 2026 said people who join in April 2027 won't get penalty points for late quarterly updates in the 2027 to 2028 tax year, the same easement April 2026 joiners have for 2026 to 2027. Two catches: you still have to send every update before your software will let you file your tax return, and a late tax return still earns a point. Paying late is a separate system with its own penalties and interest. Source: HMRC's Budget 2026 tax overview (section 2.36). More in penalties, explained.

Signing up

You don't have to sign up yet. HMRC says you can sign up before you need to, to get ready. It also writes to people it thinks need to join, but if no letter arrives it's still on you to check. To sign up you need to be registered for Self Assessment, have sent a tax return in the last two years, and have your Self Assessment sign-in details to hand. HMRC lists having compatible software as a step before you sign up, so pick that first. The steps are in HMRC's sign-up guide.

Choosing software

You need software on HMRC's recognised list. Depending on the tool, the same obligation costs anything from £0 to £288 a year, and 14 of the 30 standalone tools we track can be used for free. Which is cheapest for you depends on whether you have rental income, how you keep records now and whether you use an accountant. The finder works that out in a couple of minutes.

Want it free? See free MTD software, or MTD software that comes free with a business bank account. Happy in a spreadsheet? Bridging software files straight from it.

Could you be exempt?

Some people don't have to use MTD for Income Tax, for example if HMRC accepts you're digitally excluded. If that might be you, see who's exempt. Exempt or not, you still file a Self Assessment tax return.

What to do now

Add up your 2025 to 2026 turnover and gross rents, before expenses.
File that tax return by 31 January 2027. You have to anyway, and it's what HMRC goes on.
Over £30,000? Pick your software. The finder shows the cheapest one that fits.
Sign up on GOV.UK once your software is ready. You don't need to wait for April.
From 6 April 2027, record your income and expenses as you go.
Put 7 August 2027 in your diary for your first update.

Frequently asked questions

Does Making Tax Digital apply to me from April 2027?: It does if your qualifying income for the 2025 to 2026 tax year was over £30,000. Qualifying income is your self-employment and property income added together, before expenses. HMRC writes to people it thinks need to join, but it's your responsibility to check.
Is the £30,000 threshold based on turnover or profit?: Turnover. It's your gross self-employment income plus your gross rents, before any expenses come off, so you can be over £30,000 even if your profit is far lower.
Does my salary count towards the £30,000?: No. PAYE employment income, pensions, dividends and partnership profit shares don't count, only self-employment and property income. Your salary is still taxed as normal and still goes on your tax return.
When is my first quarterly update due?: 7 August 2027, for the period from 6 April 2027 to 5 July. The next ones are due 7 November 2027, 7 February 2028 and 7 May 2028, then your tax return by 31 January 2029.
Will I get a penalty if an update is late in my first year?: Not a penalty point, going by the Budget on 28 October 2026: people who join in April 2027 won't get points for late quarterly updates in the 2027 to 2028 tax year. You still have to send every update before you can file your tax return, a late tax return still earns a point, and paying late is charged separately.
Do I have to pay for MTD software?: No. 14 of the 30 standalone tools we track can be used for free, and several business bank accounts include MTD software at no extra cost. Free options usually have limits, so check one fits before you rely on it.

Keep reading

Figures and dates are from HMRC: its October 2026 announcement, its guidance on who needs to use MTD and qualifying income, and the Budget 2026 tax overview. This is general information, not tax advice — confirm your own position with HMRC or a qualified accountant.