HM Revenue & Customs (HMRC) has confirmed that around 1,077,000 more sole traders and landlords will need to create digital records and use software to send quarterly updates of their income and expenses from 6 April 2027.
Sole traders and landlords earning over £50,000 a year must currently comply with Making Tax Digital (MTD) for Income Tax. It applies to those earning over £30,000 from 2027.
Figures released on 16 August showed that under half of the 864,000 sole traders and landlords impacted by the first phase of the changes submitted their first update to HMRC by the 7 August deadline.
No penalties are being imposed for missing the cut-off during the first year of the new process.
In a change of strategy in September, the tax authority began automatically signing up those who should be using MTD rather than waiting for taxpayers to do it themselves.
HMRC is urging taxpayers who are impacted from April 2027 to sign up to MTD.
Craig Ogilvie, HMRC 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.”
The income threshold will decrease further to £20,000 from April 2028.
