MTD £30,000 Threshold: UK Practice Readiness Plan for April 2027

The MTD £30,000 threshold arrives on 6 April 2027, when Making Tax Digital for Income Tax extends to sole traders and landlords whose gross self-employment and property turnover is above £30,000. HMRC estimates around 1,077,000 more people will join. For UK practices, that means six months to identify affected clients, choose software routes, and set up quarterly workflows before the first deadline.

TL;DR:

HMRC confirmed on 5 October 2026 that MTD for Income Tax extends to turnover above £30,000 from 6 April 2027, bringing around 1,077,000 more sole traders and landlords into scope.

The threshold uses gross income from self-employment and property combined, before allowances or expenses, so clients with modest profits can still be caught.

The soft landing on penalty points for late quarterly updates applies to the 2026 to 2027 tax year; current GOV.UK guidance says points apply after that, with a £200 penalty at four points.

Research published on 7 October 2026 found that about one in three landlord products on HMRC's software list cannot yet file the full tax return, so check the year-end line before you commit.

Most practices will need two or three software routes, not one: full bookkeeping software, spreadsheet bridging, and capture tools feeding either.

What changes for the second cohort in April 2027?
Which of your clients are in scope, and when will you know?
What did the first year of MTD for Income Tax teach practices?
Which software routes fit which clients?
How do you check a product can actually finish the year?
What should practices do in the next six months?
How much will MTD software cost a UK practice?
Why does independent evidence matter when choosing MTD software?
Realistic expectations: the second cohort will not get a soft landing
Find your next MTD tool through The AI Ledger

What changes for the second cohort in April 2027?

On 5 October 2026, HMRC published a press release headed Sole traders and landlords earning more than £30,000 urged to act now. It confirms that from 6 April 2027, sole traders and landlords with turnover above £30,000 must keep digital records, use HMRC-recognised software to send quarterly updates, and complete their tax return through that software.

HMRC estimates the change brings around 1,077,000 additional people into scope, based on its analysis of 2024 to 2025 Self Assessment returns. That sits on top of the first cohort: MTD for Income Tax became mandatory for turnover above £50,000 on 6 April 2026, and the threshold falls again to £20,000 from April 2028.

Three details matter most for practice planning:

Turnover, not profit. The test uses gross income from self-employment and property added together, before allowances or expenses. A landlord with £18,000 of rent and a sole trade turning over £14,000 is over the line.
Quarterly updates are summaries. HMRC describes them as short summaries rather than extra tax returns. Its quarterly updates guidance says they give category totals, need no accounting or tax adjustments, and must be sent even when there was no income in the period.
Fixed deadlines. Updates are due on 7 August, 7 November, 7 February and 7 May, whether the client uses standard tax-year periods or calendar quarters.

Which of your clients are in scope, and when will you know?

The NRLA's six-month countdown article, published on 6 October 2026, notes that qualifying turnover for this cycle is based on gross income from the 2025/26 tax year. For many clients, that return will not be filed until close to 31 January 2027, leaving roughly nine weeks before the April start.

That timing is the practical problem. If you wait for filed returns to confirm who is in scope, onboarding work lands on top of the January peak. A better approach is to estimate early and confirm later.

Pull every Self Assessment client with self-employment or property income from your practice management system.
Add 2024/25 gross turnover from both sources together, then flag anyone above £25,000 as a probable or borderline case.
Ask borderline clients for 2025/26 figures to date, so you can confirm before the return is finalised.
Check exemptions, including digital exclusion, which HMRC mentions in the press release.
Record the expected MTD start year against each client, so sign-up and software decisions can be batched.

HMRC's guidance on signing up clients, last updated on 24 August 2026, says agents need an agent services account, separate from HMRC online services for agents, and that clients must be registered for Self Assessment and have filed a return in the last two years. Existing Self Assessment authorisations should appear in the agent services account; check they do before the sign-up rush.

Pro Tip: Treat the combined-turnover test as the first thing you check, not the last. The clients most likely to be surprised are those with two modest income streams, such as a part-time sole trade alongside a single rental property.

What did the first year of MTD for Income Tax teach practices?

The first cohort has now sent one quarterly update and faces the second on 7 November 2026. Two pieces of evidence published this week show where the friction sits.

Research by Opinium for Affinia, reported by RealBusiness on 7 October 2026, surveyed 1,000 sole traders and landlords. Of the 832 who had completed a first quarterly update, 43% said it involved more administration than expected, 41% said it took longer than anticipated, and 40% needed more support than planned. Across all 1,000, 43% had started keeping records more regularly and 36% had bought MTD-compatible software.

Those figures suggest the first update is a workload event for the practice as much as the client. Clients who needed more support than planned typically turn to their accountant, often close to the deadline.

The second lesson concerns software readiness, covered in detail below. Together, the two points argue for deciding each client's route and testing it on a live quarter well before April 2027.

Which software routes fit which clients?

Most practices will not run every MTD client on one product. Client habits vary too much. In practice there are three routes, and many clients will use a combination.

Full bookkeeping software. Clients keep digital records in a cloud ledger that submits quarterly updates directly. This suits clients who already use, or are willing to adopt, bookkeeping software. The directory lists Xero, with an editor score of 4.5 out of 5, and QuickBooks with Intuit Assist, with an editor score of 4.3 out of 5. For smaller clients and firms wanting a UK-specific option, Briefcase, with an editor score of 4.1 out of 5, says on its own site that it "is recognised by HMRC for Making Tax Digital for Income Tax".

Spreadsheet bridging. Clients keep their spreadsheets, and the practice uses bridging software to send category totals. TaxCalc says its MTD Quarterly Filer lets accountants import records, map data, review figures and submit quarterly updates, and that clients "can continue using spreadsheets". TaxCalc holds an editor score of 4.6 out of 5 in the directory.

Capture tools feeding either route. Receipt and invoice capture does not file anything with HMRC by itself, but it reduces the record-keeping burden that made the first update hard work. Dext, with an editor score of 4.7 out of 5, and AutoEntry, with an editor score of 4.4 out of 5, are the two most established capture options in the directory: Dext's directory verdict notes deep Xero and QuickBooks integrations, and AutoEntry comes from the Sage stable.

Client profile	Likely route	Example tools in the directory	Editor score	Main risk
Already on a cloud ledger	Full bookkeeping software	Xero, QuickBooks with Intuit Assist	4.5, 4.3	Category mapping errors carried into quarterly totals
Small sole trader new to software	Low-cost ledger with direct filing	Briefcase	4.1	Newer product; confirm year-end return support
Landlord or trader on spreadsheets	Spreadsheet bridging	TaxCalc MTD Quarterly Filer	4.6 (TaxCalc)	Spreadsheet quality and late data each quarter
Paper-heavy client	Capture tool plus either route	Dext, AutoEntry	4.7, 4.4	Capture backlog building up before deadlines

Pro Tip: Decide the route per client, not per practice. A single policy forces some clients into software they will not use, and the result is late records rather than digital ones.

How do you check a product can actually finish the year?

On 7 October 2026, The Negotiator reported analysis by LetCompliance of HMRC's official software list. Of 128 products handling UK property income, 84 showed the tax return as ready, 32 showed it as in development and 12 did not include it. Of the 84 ready products, only 11 were ready for all 16 other income types HMRC lists, such as bank interest, dividends and pensions.

HMRC's definition of "in development" is a commitment to build the feature in time for the 2026 to 2027 tax return, which is due by 31 January 2028. A product can therefore be on the list and suitable for quarterly updates while still unproven at year end.

Before committing a client to a product, run four checks:

Use HMRC's software finder and confirm the product supports agents, if you will file for the client.
Check the tax return line shows ready now, not in development.
List the client's other income, such as savings interest, dividends, pensions or foreign income, and confirm each is supported.
Confirm whether the product handles every income source the client has, including multiple properties or more than one trade.

HMRC states on that guidance page that all listed software has been through its recognition process and that it does not recommend any product or provider. Recognition is a floor, not an endorsement.

What should practices do in the next six months?

Six months is enough if the work is spread out. Compressing it into February and March 2027 is the scenario to avoid.

Window	Practice task	Output
October to November 2026	Scope the client list on 2024/25 turnover; flag borderline cases	Client list with expected MTD start year
November to December 2026	Agree a software route per client; set pricing for quarterly work	Signed engagement letters with MTD scope
December 2026 to January 2027	Move willing clients onto software early; sign up volunteers	Clients keeping digital records before mandation
February to March 2027	Confirm scope from filed 2025/26 returns; complete sign-ups	All in-scope clients signed up
April to August 2027	Run the first quarter; review exceptions before 7 August	First update filed, workflow adjusted

Signing clients up as volunteers before mandation is worth considering for those who are ready. According to the current quarterly updates guidance, volunteers do not receive penalties for late quarterly updates, though late tax returns still earn points.

Your practice management system carries much of this load. Senta, with an editor score of 4.3 out of 5, automates client communications and job workflows from triggers and schedules, and Karbon, with an editor score of 4.4 out of 5, builds AI email summarisation and drafting into firm workflows. Either way, four deadlines a year should run from scheduled jobs, not memory.

How much will MTD software cost a UK practice?

Costs depend on the route, and most practices will pay for more than one product. The figures below come from directory records and vendors' own pages; check current terms before quoting clients.

Spreadsheet bridging. TaxCalc lists MTD Quarterly Filer "from £112 per year", with 50% off for practices holding an active Tax Return Production Individual and Partnership licence. TaxCalc's Tax Return Production is listed in the directory from £187, as a modular annual licence banded by client volume.
Low-cost ledger. Briefcase's directory record lists pricing from £9 per client per month, with no per-user fees.
Capture. Dext prices practice plans per client per month with a 10-client minimum, with exact rates shown through its plan builder. AutoEntry uses credit-based monthly plans and publishes GBP pricing. Datamolino, with an editor score of 4.1 out of 5, lists firm plans from £25 per month.
Practice management. Senta's pricing is not published and is quoted by IRIS. Karbon does not publish figures on its pricing page.

The larger cost is staff time. If four in ten clients need more support than planned, as the Affinia research found for the first cohort, quarterly work needs pricing as a recurring service rather than absorbing it into the annual fee.

Pro Tip: Price MTD work per quarter and per income source. A landlord with five properties and a sole trade generates more review work each quarter than a single-trade client with the same turnover.

Why does independent evidence matter when choosing MTD software?

HMRC's list tells you a product has passed recognition. It does not tell you how well the product handles a messy spreadsheet, how reliable its bank feeds are, or whether its year-end return will be ready on time. Vendor pages are written to sell, and in a deadline-driven market every vendor describes itself as ready.

Independent editor scores and last-verified dates give you a second reference point. Each listing in The AI Ledger directory records the date its pricing and features were last checked, so you can see whether the information predates a product change. Scores are editorial assessments made against the same criteria for every tool, not vendor claims.

Use the scores to build a shortlist, then test with real client data. A product that scores well generally may still be wrong for a client with unusual income types.

Realistic expectations: the second cohort will not get a soft landing

The first cohort's 2026 to 2027 year carries no penalty points for late quarterly updates, but current GOV.UK guidance says points apply after that year, so clients joining in April 2027 should be treated as live from their first deadline on 7 August 2027. Software will not fix a client who sends records late; agree the data deadline for each quarter in the engagement letter before April.

Find your next MTD tool through The AI Ledger

Start with the tax prep category for filing and bridging tools, and the data entry and receipts category for capture tools that reduce record-keeping work. If you are unsure which combination fits your client base, the AI tool finder helps you narrow the directory to tools that fit your practice, and compare puts shortlisted tools side by side.

Frequently asked questions

How many people will join MTD for Income Tax in April 2027?

HMRC estimates that around 1,077,000 more sole traders and landlords will come into scope for MTD for Income Tax from 6 April 2027, when the threshold falls to £30,000. The estimate is based on HMRC's analysis of 2024 to 2025 Self Assessment returns, and HMRC confirmed the change in a press release on 5 October 2026.

Which tax year decides whether a client is in the £30,000 MTD group?

Qualifying turnover for the April 2027 MTD group is based on gross income from the 2025/26 tax year. Many of those returns will not be filed until close to 31 January 2027, leaving roughly nine weeks before the start. Practices can estimate early using 2024/25 turnover and flag anyone above £25,000 as probable or borderline.