With six months to go until Making Tax Digital is extended to sole traders and landlords with qualifying income over £30,000, HMRC is ramping up communications to ensure as many of the 1,077,000 taxpayers affected by the extension sign up for new quarterly reporting regime.

The new MTD system kicks in for £30,000 plus income from 6 April 2027, and will be a major administrative burden for taxpayers with relatively low earnings used to filing a self assessment tax return just once a year.

Many of these individuals are likely to handle their own tax returns and a large number will be unrepresented by tax agents or accountants. This may well change when they realise the onerous nature of MTD.

Under MTD, they will have to file quarterly digital records of income and expenses from self employment and property in two separate submissions using compatible software or a bridging app. HMRC already struggled to get the first wave of £50,000 taxpayers sign up and resorted to auto enrolment for anyone who missed the first 8 August filing deadline.

Perhaps acknowledging concerns about the scale of the new tax reporting requirements, HMRC stressed: ‘The quarterly updates are not additional tax returns, but short summaries.’

It is important to note turnover includes gross income from self-employment and property before any tax allowances or expenses are deducted. The new threshold from the 2027-28 tax year drops to £30,000. Once again, these thresholds are not increased in line with inflation so increasingly catch many more taxpayers, another blatant example of fiscal drag biting into earnings.

The threshold for MTD will drop again in April 2028 to £20,000, in effect creating the equivalent of PAYE for sole traders and landlords.

Craig Ogilvie, HMRC’s director of making tax digital, said: ‘Signing up now means you can prepare and familiarise yourself with the process before it becomes mandatory next April.’

On unrepresented taxpayers, HMRC is working with a range of partners, including professional bodies, British Retail Consortium, OneDance Yoga Alliance Professionals, and many others.

‘As we prepare future MTD cohorts, we’ll continue building on these partnerships and the collaborative approach that has worked so well. We will continue to write directly to unrepresented customers to give them specific support,’ Ogilvie said.

‘Supporting customers who are not represented by an agent remains a key priority for the team and I over the next few years.’

It has not been confirmed whether HMRC will offer a targeted penalty waiver for the £30,000 cohort, as the current soft landing regime only runs until 5 April 2027. It is not known whether the government will offer the same level of support to these lower earners being pulled into MTD.

HMRC has been contacted for comment on the penalty regime for 2027-28 MTD signups.

Essential links

Deadlines for MTD quarterly reporting 2026 to 2028

Find out all about Making Tax Digital in our special MTD portal