Making Tax Digital: Six Months to Go for the Next Group

Making Tax Digital (MTD) for Income Tax started in April 2026 for sole traders and landlords with income over £50,000. On 5 October, HMRC confirmed that the next group will join in six months’ time. Here’s what this means for you, whether you’re already using MTD or about to start.

1. Income Over £30,000? MTD Applies to You from 6 April 2027

From 6 April 2027, sole traders and landlords with income over £30,000 will need to use MTD for Income Tax. HMRC expects around 1,077,000 more people to join.

It’s based on turnover, not profit

This is where many people get caught out. The £30,000 test uses your gross self-employment and property income, before any expenses or allowances are deducted. For example, a sole trader with £34,000 turnover and £12,000 profit is still included.

What changes for you?

• You’ll keep digital records of your income and expenses throughout the year.

• You’ll use HMRC-recognised software to send quarterly updates to HMRC.

• You’ll submit your year-end tax return through the same software.

The quarterly updates are short summaries, not extra tax returns.

Signing up

HMRC is encouraging people to sign up early. That gives you time to check your details are correct and get comfortable with the process before it becomes compulsory. To sign up, you must be registered for Self Assessment and have submitted a tax return in the last two years. Agents can sign up on behalf of clients, so if you’re an Anlo client, we’ll do this for you if we haven’t already.

You may already have noticed the Q1 or Q2 reports we’ve sent with your management accounts. These are your MTD quarterly reports.

Looking further ahead

The threshold drops again to £20,000 from April 2028.

2. Already Using MTD? Your Second Quarterly Update Is Due by 7 November 2026

If you’ve been using MTD since April, your second quarterly update (Q2) is due by 7 November 2026.

If we’ve received your bank statements, invoices and other records, we’ll send your Q2 report with your management accounts. If you haven’t sent these yet, please send them as soon as possible so we can submit before the deadline.

A quick reminder of how quarterly updates work:

• They’re summaries, not tax returns. Your software adds up your income and expenses by category.

• No adjustments are needed before an update is sent.

• You still need to send one if nothing happened. HMRC must be told even if you had no income or expenses in the period.

• Each business needs its own update. If you have both self-employment and property income, a separate update is sent for each.

After each update, you can see an estimate of your tax bill in your software or your HMRC online account. This is useful for budgeting ahead of 31 January.

Upcoming submission dates:

• 7 February 2027: third update (Q3)

• 7 May 2027: fourth update (Q4)

How We Can Help

We work in both Xero and FreeAgent, and we’ve found that using them makes MTD much simpler for our clients. If you’re an Anlo client, we’ll help you get set up and make sure your quarterly updates are submitted on time.