Making Tax Digital (MTD) for Income Tax is being rolled out to more sole traders from April 2027. If your qualifying income from self-employment and property is more than £30,000, now is the time to get ready.
Sole traders and landlords with qualifying income over £50,000 have already been required to use MTD for Income Tax since April 2026. This means keeping digital records using compatible software and sending quarterly updates to HMRC, as well as submitting your tax return digitally.
If you’re already using MTD, make sure those quarterly updates are firmly in your diary. If the £30,000 threshold brings you into MTD from April 2027, getting your software and record-keeping sorted now will make the switch much easier.
What’s changed – and what it means for builders
Making Tax Digital (MTD) for Income Tax is being introduced in stages. It already applies to sole traders and landlords with qualifying income over £50,000, and from 6 April 2027, it will also apply to those with qualifying income over £30,000. The threshold will reduce again to over £20,000 from April 2028.
If MTD applies to you, you must:
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Keep digital records of your self-employed income and expenses.
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Use MTD-compatible software that can send information directly to HMRC.
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Send quarterly updates to HMRC through your software, summarising your income and expenses.
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Submit your tax return digitally using compatible software by the usual Self Assessment deadline.
For builders already using MTD, quarterly updates are now an important part of staying on top of your tax reporting throughout the year. If you'll come into MTD from 2027, use the time now to check what you need to do and get ready.
Who needs to sign up?
If you're a sole trader (or a landlord) registered for Self Assessment, and your gross income from self-employment and/or property exceeds £30,000, the deadline to start keeping digital records is 6 April 2027.
HMRC will review your most recent tax return ahead of April 2027 to check your qualifying income and will have been in touch if you need to go digital. But you can also check your status using HMRC’s eligibility tool.
HMRC will not sign you up automatically, so it’s important to make sure you sign up as soon as possible if you need to do so, even if you have missed the April deadline. To sign up for MTD visit Gov.uk.
What you need to do for MTD
- Estimate your qualifying income from self-employment and property.
- Use the HMRC tool to check if and when you must start using MTD.
- Choose MTD compatible software tailored to your needs (mobile-friendly, integrates with bookkeeping, etc.). If you’re registered with the Construction Industry Scheme (CIS) look out for software that can handle both CIS and MTD. You can use the HMRC software finder tool to help you choose.
- If you work with an agent or accountant, send them the HMRC’s Agent Toolkit and ensure they’re set up in HMRC’s Agent Services and can sign you up.
- Sign up, test the system, and get familiar with quarterly updates and digital record-keeping.
At the end of your tax year, most of your work will already be done – the quarterly updates prepopulate much of the return. Just review, adjust if needed, then submit your Self Assessment.
Choosing the right software
HMRC have put together a short video explaining the software requirements, the different options available, and how to choose the right solution for your business. Take a look below.
What are the MTD quarterly updates due
If you're already using MTD for Income Tax, don't forget that you need to send an update every three months. For the 2026/27 tax year, the remaining quarterly deadlines are 7 November 2026, 7 February 2027 and 7 May 2027.
| What to submit to HMRC | Deadline date |
|---|---|
| 1st quarterly update | 7 August |
| 2nd quarterly update | 7 November |
| HMRC Self Assessment | 31 January |
| 3rd quarterly update | 7 February |
| 4th quarterly update | 7 May |
How this can help your business
Making Tax Digital for Income Tax have several benefits that will help you stay on top of your tax affairs and business planning, supporting you to grow your business.
- No end-of-year scramble: Quarterly updates eliminate last-minute chaos.
- Fewer mistakes: Built-in checks reduce errors and delays.
- Real-time insight: Keep tabs on income and expenses as you work – great for project planning.
Where to learn more about MTD
You can watch a short video or recorded HMRC webinar to better understand the legal requirements of MTD. There are also regular live webinars, including Q&A, covering the steps sole traders should take to take to get ready for MTD, including how to plan for it, actions to take and what to do after signing up. These are also recorded and made available to watch on demand if you can’t catch it on the day (sign up to view the latest webinar here).
Be prepared and avoid penalties
For the 2026/27 tax year, you won’t receive penalty points for sending a quarterly update late. However, you’ll still need to submit any outstanding updates before you can complete your tax return.
From 2027/28, late quarterly updates can result in penalty points. If you reach the penalty points threshold, you may receive a £200 penalty, so it’s worth getting into the habit of submitting your updates on time.
| Step | Action |
|---|---|
| 1 | Estimate gross income from self-employment and property for the previous financial year, or check eligibility online. |
| 2 | Check eligibility with HMRC’s tool. |
| 3 | Find and try out MTD-compatible software. |
| 4 | Sign up to avoid penalties. |
| 5 | Keep digital records, submit quarterly updates, and file annually via the software |
Find out more
You can find out more about the changes on HMRC’s Making Tax Digital web page, including all the resources mentioned in this article.
Making Tax Digital for Income Tax is transforming the way builders manage their taxes. Embrace digital record-keeping, choose your software wisely, and sign up early to stay ahead. You’ll save time, cut errors, and gain greater clarity – all of which means more focus on building the future.
