MTD for £30,000 Earners: What Changes in April 2027 for the Self-Employed

The rollout so far

Making Tax Digital for Income Tax is arriving in waves by income:

• April 2026: gross income over £50,000 (already live)
• April 2027: gross income over £30,000 — the wave that catches most full-time tradespeople
• April 2028: gross income over £20,000

How to check if it applies to you

The test is gross income — your total turnover from self-employment plus any property income, before expenses — as reported on your 2025–26 tax return. It is not your profit. A tradesperson turning over £40,000 but netting £22,000 after materials and van costs is still in scope from April 2027, because the £30,000 test looks at the £40,000.

That distinction catches people out. Because it is turnover, most full-time tradespeople clear £30,000 comfortably — so if the April 2026 wave passed you by, April 2027 very likely will not.

What actually changes

• You must keep digital records of income and expenses in compatible software.
• You send HMRC a quarterly update of your totals — four a year. No tax is paid with them, you still send one if there was nothing to report, and corrections go in your next update.
• Your tax return (previously called the final declaration) is still due by 31 January after the tax year, sent through MTD-compatible software. HMRC pre-fills PAYE, pension and CIS deduction figures, and payment dates are unchanged.
• Quarterly deadlines are 7 August, 7 November, 7 February and 7 May, each cumulative from 6 April.

How to get ready — the easy way

The mistake is waiting until spring 2027 and then scrambling. The people who will barely notice the change are the ones already keeping digital records now, out of habit. You do not need to become a bookkeeper — you need a tool that captures the data as you work:

• Income that records itself from the invoices you already send
• Receipts captured with a photo, categorised by AI
• Quarterly figures prepared for you, with deadline reminders

Do that and April 2027 is a non-event. Sleepless Tradesman handles all three (AI receipt scanning is on paid plans; the MTD records are on the free plan), and its automatic quarterly figures mean your numbers are ready to export for you or your accountant to submit when the deadline comes. Direct submission to HMRC from the app is coming once HMRC approves it. See the accounting features.

Penalties for Missing MTD Deadlines

HMRC uses a points-based penalty system alongside MTD. Each quarterly update or tax return you send late normally earns a penalty point. Reach four points and a £200 penalty is charged, and each further missed deadline costs another £200. From April 2027 the points system applies to everyone who files a Self Assessment return, not only MTD users.

A first-year soft landing for the April 2027 group: the Budget on 28 October 2026 announced that people joining in April 2027 will get no penalty points for late quarterly updates in 2027-28, as the April 2026 group has had in 2026-27. The legislation is still to be passed, you must still send every update before you file your tax return, and late tax returns and late payment are still penalised.

Below four points, each point is removed automatically 24 months after the missed deadline. Once you reach four, your points are cleared after 12 months of sending every update and return on time, with nothing outstanding from the previous 24 months.

Late payment penalties are separate. From April 2027 HMRC charges 4% of the tax unpaid at day 15, another 4% at day 30, then 10% a year, plus interest (it is 3% and 3% for 2026-27). Source: Penalties for Making Tax Digital for Income Tax (GOV.UK). The simplest protection is software that has the deadlines built in.

What "Digital Records" Actually Means

HMRC's requirement for "digital records" sounds bureaucratic but in practice it just means your income and expenses must live in software rather than a paper book or memory. Specifically, for each business transaction you must record:

• The date of the transaction
• The amount (gross of VAT if you're not VAT-registered; net if you are)
• A description or category

You don't need to store digital copies of every receipt — though AI receipt scanning makes this effortless — but the transaction itself must be in the software. Invoices created in Sleepless Tradesman already meet this requirement for income. Expense receipts photographed in the app do too.

Special Cases: CIS, Multiple Trades and Property Income

CIS subcontractors: Your gross income is the gross amount before CIS deductions — not the amount paid to you after the contractor deducts tax. A roofer who invoices £45,000 but receives £36,000 after 20% CIS deductions has gross income of £45,000 for MTD purposes. Your quarterly updates show gross income and expenses only — CIS deductions are not included in them. HMRC uses the deductions your contractors report in its tax estimate and pre-fills them in your tax return, and any refund comes once a year with the tax return (in-year refunds are only possible if you stop trading).

Multiple income sources: HMRC combines all self-employment income when testing the threshold. Running two trades (e.g. plumbing and gas engineering) means adding both turnovers together. Property income also counts, so a tradesperson who also rents a property may hit the threshold sooner than expected.

Partnerships: Your share of profit from a partnership does not count towards your qualifying income, so it does not bring you into MTD on its own. HMRC says partnerships will need to use Making Tax Digital in the future but has not set a date. If you are a partner and also a sole trader or landlord, that other income still counts (GOV.UK).

Frequently asked questions