Landlords earning more than £30,000 in qualifying income are being urged to prepare for Making Tax Digital (MTD) for Income Tax ahead of its expansion in April 2027.
Accountancy software provider FreeAgent has warned landlords and sole traders to familiarise themselves with the new requirements before the deadline, as the next phase of the legislation is expected to bring a substantial number of additional taxpayers into the system.
From 6 April 2027, landlords and sole traders with qualifying self-employed income above £30,000 will be required to submit quarterly tax updates to HMRC through digital reporting.
MTD for Income Tax currently applies to those with qualifying income above £50,000. The reduction in the threshold will bring an additional 1.8 million people within the requirements, according to the figures in the announcement.
FreeAgent said landlords affected by the change should begin preparing now rather than waiting until the deadline, warning that accountants and bookkeepers could face increased demand for support as the new cohort approaches.
“The new threshold is going to introduce the largest number of sole traders and landlords we can expect to see at the one time, so we know, from talking to our partners, that those in the accounting and bookkeeping sector are going to be completely rushed off their feet," warned Jon Martingale, head of product management at FreeAgent.
“My advice to anyone who is going to be included in the new intake is to get up to speed with the rules and regulations of MTD now - don’t wait until next year. The key is to get ahead early, and get into the swing of saving and storing your tax information digitally, so it doesn’t creep up on you come April. We understand it can feel daunting, but with the right technology and support behind you, it can be very straightforward.”
The income threshold is scheduled to fall further to £20,000 in April 2028, which is expected to bring another 975,000 people into the system.
As with the existing £50,000 income group, HMRC will apply a soft landing period for the first year of the new requirements. It will not issue penalty points for late submissions during that period.
