On this page · 9 sections
- What changed this autumn
- Who must join on 6 April 2027
- The 2027-28 calendar for the £30,000 group
- Penalties: points, £200 charges and late payment
- The software checklist for sole traders and landlords
- The process checklist: November 2026 to May 2028
- What developers building MTD-compatible software must support
- How eCorpIT can help
- References
Summary. From 6 April 2027, sole traders and landlords whose qualifying income from self-employment and property was over £30,000 in the 2025 to 2026 tax year must use Making Tax Digital (MTD) for Income Tax. The threshold is set in regulation 27 of the Income Tax (Digital Obligations) Regulations 2026. Qualifying income is turnover before expenses, so £22,000 of rent plus £9,000 of freelance fees (£31,000) is in scope however small the profit, while salary, pensions, dividends and partnership profit shares do not count. Joining means digital records in HMRC-recognised software, four cumulative quarterly updates due 7 August, 7 November, 7 February and 7 May, and a tax return filed from software, the first by 31 January 2029. Budget 2026 (28 October 2026) announced no late-submission points on this group's 2027-28 quarterly updates and exempted qualifying care relief claimants and some non-residents until further notice; the exemptions need secondary legislation before April 2027. Late tax returns still earn points (4 points means a £200 penalty) and late payments still cost 4% at day 15 and again at day 30. For developers, every MTD API call needs fraud prevention headers, and HMRC has paused new applications for production access, with an update expected in early 2027. This is general information, not tax advice.
About this article. This guide is for UK sole traders, landlords, their accountants and the product teams building MTD software. We checked every date, threshold, penalty and API requirement against HMRC's GOV.UK guidance, the Budget 2026 overview of tax legislation and rates, the 2026 regulations on legislation.gov.uk and the HMRC Developer Hub on 13 November 2026. It is general information, not tax or legal advice, and HMRC updates its MTD pages often, so check with your accountant before acting. Researched with AI assistance and reviewed by our editorial team.
What changed this autumn
Four updates since the summer matter to anyone in the £30,000 group or building for it.
Penalty easement for the April 2027 group. Section 2.36 of the Budget 2026 overview of tax legislation says the government will not apply late-submission penalty points to 2027-28 quarterly updates for people required to join MTD in April 2027. You still have to send all four updates before software will let you file the tax return, so only the points are waived. As worded, the easement covers only the April 2027 joiners. HMRC's penalties page, last updated on 30 March 2026, does not mention it yet and still says quarterly update points apply for tax years after 2026 to 2027.
New exemptions until further notice. Section 2.37 exempts people eligible for qualifying care relief (such as foster and kinship carers), non-UK resident foreign entertainers and sportspeople, and expected non-resident customers, with secondary legislation promised before April 2027. A small number of insolvent customers who cannot sign up will also be left out. Other temporary exemptions end on schedule. HMRC's exemption page, updated on 12 November 2026, says people exempt for 2026-27 because they claimed averaging relief or filed the trusts and estates page (SA107) must use MTD from 2027-28 if their qualifying income is over £30,000.
Production access for software. The Developer Hub's MTD service guide says HMRC no longer accepts production credential requests for new 2026-27 quarterly update products. HMRC's October developer newsletter goes further: new applications for production access are temporarily paused while HMRC reviews its arrangements and readiness criteria, existing eligible applications are still being assessed, and more information is expected in early 2027.
Sign-up changes. From September 2026, HMRC began signing up people in the April 2026 group who had not signed up themselves, and on 13 October 2026 it removed the option to prove identity by answering questions. Budget 2026 also set April 2029 for VAT e-invoicing requirements, to be enabled in Finance Bill 2026-27, with a consultation on digital reporting open until 20 January 2027. Our UK e-invoicing 2029 guide covers that roadmap.
Who must join on 6 April 2027
You must use MTD for Income Tax if all three apply: you are a sole trader or landlord registered for Self Assessment, you have self-employment or property income (or both), and your qualifying income is over the threshold for the relevant tax year. The thresholds sit in regulation 27 of SI 2026/336, made under Schedule A1 to the Taxes Management Act 1970 and in force since 1 April 2026. The table below summarises both sources.
| Start date | Qualifying income | Tax year HMRC checks | Position on 13 November 2026 |
|---|---|---|---|
| 6 April 2026 | Over £50,000 | 2024 to 2025 | Live; second quarterly update was due 7 November 2026 |
| 6 April 2027 | Over £30,000 | 2025 to 2026 | Set in regulation 27 of SI 2026/336 |
| 6 April 2028 | Over £20,000 | 2026 to 2027 | Set in regulation 27 of SI 2026/336 |
| Not set | Partnerships | Not set | HMRC will publish a timeline later |
HMRC reviews the 2025-26 Self Assessment return (due 31 January 2027) and writes to anyone over £30,000, but a missing letter is no defence: you must check your own figures. To sign up you must be registered for Self Assessment and have filed a return in the last 2 years. You can sign up now, either as a volunteer for the current year or for 2027-28.
What counts as qualifying income
Qualifying income is your total self-employment and property income before expenses, taken from the previous year's return. HMRC's own example adds £25,000 of rent to £27,000 of self-employment income to reach £52,000. Points that change the answer in practice:
- Jointly owned property: only your share counts. A £50,000 jointly let property split equally gives each owner £25,000.
- VAT on the cash basis: if you include VAT in declared income, it counts towards the threshold.
- Ceased sources: a source that stopped since your last return still counts if you have another continuing source. If every source has stopped, tell HMRC before the tax year starts, or it may sign you up from the information it holds.
- Short first years: HMRC annualises a sole trader's income, so 6 months of trading at £18,000 is treated as £36,000. Landlords must annualise property income themselves.
- Excluded: PAYE salary, a partner's profit share, dividends, the State Pension, private pensions, qualifying care relief receipts, UK REIT and PAIF income, and transition profits from basis period reform.
- Non-residents: only UK property income and self-employment income declared on the UK return count.
Here is how that plays out for three typical people with 2025-26 figures:
| Person | 2025-26 gross income | Qualifying income | From 6 April 2027? |
|---|---|---|---|
| Freelance developer with a day job | £40,000 salary, £24,000 freelance fees | £24,000 | No; joins April 2028 if over £20,000 in 2026-27 |
| Landlord with a side business | £22,000 rent, £9,000 self-employment | £31,000 | Yes |
| Co-owner of two flats | £56,000 rent, 50% share | £28,000 | No for 2027; check again for 2028 |
Exemptions
Some exemptions are automatic and some need an application. Automatic and permanent unless circumstances change: qualifying income of £20,000 or less, no National Insurance number before the tax year starts, non-resident companies filing an SA700, trusts filing an SA900, personal representatives, Lloyd's members, and people who cannot provide information to HMRC and have a power of attorney or deputy in place. Ministers of religion and people claiming Married Couple's Allowance or Blind Person's Allowance are exempt beyond April 2027 until HMRC sets a date.
The digitally excluded exemption needs an application. HMRC lists age, health or disability, religious objection and no internet access at home or a suitable alternative location as grounds. It will refuse applications based only on having filed on paper, being unfamiliar with software, having few records, or the cost and time of using MTD.
The 2027-28 calendar for the £30,000 group
MTD changes how often you report. It does not change when you pay. Here is the timeline for someone joining on 6 April 2027 with a standard tax-year accounting period. Our US and UK compliance calendar for 2027 puts these dates beside other April 2027 deadlines.
| Date | What happens |
|---|---|
| 31 January 2027 | 2025-26 return due; HMRC uses it to test the £30,000 threshold |
| Before 6 April 2027 | Choose software, sign up, authorise software, set the update period type |
| 6 April 2027 | Digital records start for every self-employment and property business |
| 7 August 2027 | Quarterly update 1 (6 April to 5 July) |
| 7 November 2027 | Quarterly update 2 (6 April to 5 October) |
| 31 January 2028 | 2026-27 return filed the old way; tax due, plus any first payment on account |
| 7 February 2028 | Quarterly update 3 (6 April to 5 January) |
| 7 May 2028 | Quarterly update 4 (full year to 5 April) |
| 31 January 2029 | First tax return filed from MTD software, and balancing payment |
Each update is cumulative from 6 April, so the third covers nine months, and corrections made in the records flow into the next update. Anyone whose accounting period runs 1 April to 31 March should use calendar update periods instead, with the same four deadlines; the choice must be made in software before the first update and cannot be changed later that year. You can send an update up to 10 days before a period ends if no more transactions are expected, and a nil update is still required for a quarter with no income.
Penalties: points, £200 charges and late payment
MTD participants move onto a points system that replaces the old Self Assessment penalties from the year they join. HMRC's guidance also says the new penalties will apply to everyone who files a personal Self Assessment return from April 2027, and that someone who becomes exempt in 2027-28 drops to a 2-point threshold. The table combines HMRC's penalties guidance with the Budget 2026 easement.
| Event | 2027-28, first year for this group | Later years |
|---|---|---|
| Late quarterly update | No points (Budget 2026 announcement) | 1 point per missed deadline, even with several businesses |
| Late tax return | 1 point | 1 point |
| Reaching 4 points | £200 penalty, then £200 for each further miss | Same |
| Payment 16 to 30 days late | No penalty in your first year | 4% of tax owed at day 15 (latest published rate) |
| Payment 31 or more days late | 4% at day 15 and 4% at day 30, plus 10% a year from day 31 for up to 2 years | Same, at the rates for that year |
The 30-day first-year allowance is given once, so someone who volunteered earlier keeps 15 days. Points below the threshold expire 24 months after the missed deadline. Once you reach 4, they only reset after 12 months of on-time submissions with nothing outstanding for the previous 24 months. VAT and Income Tax points are counted separately. An agreed payment plan pauses late payment penalties from the date you contacted HMRC, and late payment interest continues as before.
The software checklist for sole traders and landlords
HMRC does not recommend products. Its online software finder lists only products that have passed HMRC's recognition process, and free products exist for simple tax affairs, possibly with limits on transactions. The finder asks about your income sources, other income, record type and accounting period. Before you pay for a subscription, check that the product, or a set of products used together, can do all of the following.
- Create, store and correct digital records of every self-employment and property income and expense, each with an amount, date and Self Assessment category.
- Send quarterly updates per business. Each sole trade is a separate business. All UK lets form one UK property business. Foreign property is one business with records kept per property.
- Add other income and file the tax return, including savings, dividends, a partnership share and pensions, by 31 January after the tax year.
- Match your accounting period: standard (6 April) or calendar (1 April) update periods.
- Handle your record type. Below £90,000 turnover per source, sole traders may record only whether an item is income or expense. Residential landlords must still flag restricted finance costs such as mortgage interest.
- Support joint lets if you have them: records of your share only, summary records per category, and the option to leave joint expenses out until a resent fourth update.
- Work with your agents. HMRC allows one main agent and several supporting agents; only the main agent can file the tax return, after the client confirms it in writing.
- Show HMRC Assist prompts, which flag likely errors in your return using the data HMRC holds.
- Keep records exportable. HMRC's minimum standards say end users should own and be able to export their records, and you must keep them for at least 5 years after the 31 January deadline.
If you prefer spreadsheets, bridging software can read them and make the submissions. The digital links rule then applies: once a record has gone to HMRC in an update, you must not retype, copy or cut and paste it between products. Linked cells, CSV or XML import, file transfer and API connections are all acceptable links. You may use several products, but only one product for each separate submission, so a landlord cannot split property updates across two tools.
Choosing between the big subscription brands is a separate decision. Our Xero vs QuickBooks vs Sage comparison for MTD covers plans and annual cost.
The process checklist: November 2026 to May 2028
Now to January 2027. Work out your 2025-26 qualifying income from your records, not from a letter you may or may not get. If you are close to £30,000, check joint shares, VAT treatment and any ceased source. File the 2025-26 return early so HMRC's threshold test uses final figures. If you run payroll as well, note that mandatory payrolling of benefits in kind starts on the same 6 April 2027.
February to March 2027. Pick software using the HMRC finder or your accountant's platform. Decide who sends updates: you, a main agent, or both with a supporting agent for bookkeeping. Connect bank feeds, set up categories, choose standard or calendar periods, and list every business (each sole trade, UK property, foreign property).
Before 6 April 2027. Sign up with the user ID and password from your Self Assessment registration, or let your agent sign you up. Have your business name, address, trade and any start date in the last 2 tax years ready. You may be asked to confirm identity through a mobile app using a passport or driving licence. Then authorise the software to connect to HMRC.
April to July 2027. Record transactions as they happen. Reconcile bank feeds, since some transactions arrive without enough detail and need a separate record. Review the first cumulative totals before 7 August.
August 2027 to May 2028. Send each update, review the in-year tax estimate in software or your HMRC account, and fix errors in the records rather than in the return. Treat the 2027-28 easement as a rehearsal year, not a reason to skip updates.
After 5 April 2028. Make accounting adjustments, claim allowances and losses, add other income, check the HMRC calculation, then file by 31 January 2029. You can amend a submitted return within 12 months of the deadline.
What developers building MTD-compatible software must support
This section is for product teams at accounting vendors, landlord platforms, gig-economy apps and accountancy practices building client portals.
Minimum functionality. HMRC's minimum functionality standards must be met by one product, or several together, before it grants production access. The list covers sending fraud prevention header data, getting a business ID for each business, creating and keeping all required digital records (or linking to software that does), submitting quarterly updates for each mandated income source, showing a tax estimate with an accuracy disclaimer or sending the user to their HMRC account, making adjustments, handling losses, covering non-mandated income or sending users elsewhere for it, and submitting the tax return.
APIs by product type. HMRC recognises three builds, listed below from its integration guide:
| Product type | APIs HMRC lists |
|---|---|
| In-year (quarterly updates) | Business Details, Obligations, Self-Employment Business and/or Property Business; Individual Calculations if you show the estimate in-app |
| End-of-year | Business Details, Self-Employment Business and/or Property Business, Business Source Adjustable Summary, Individual Losses, Individuals Tax Liability Adjustments, Obligations, Individual Calculations |
| Full end-to-end | Both sets, built in one go or in stages with a Production Approvals Checklist for each stage |
Other APIs cover dividends, savings, pensions, employments, reliefs, Capital Gains Tax and CIS deductions if you want to complete the whole return. Note the vocabulary gap: since August 2026 HMRC's service guide says tax return, but the Individual Calculations API documentation, now at version 9.0, still describes the last step as a final declaration.
Fraud prevention headers. HMRC's specification (version 3.3, issued 27 January 2025) says header data is a legal requirement for the VAT and Income Tax MTD APIs, and that providers who keep sending incorrect or missing data after discussion with HMRC may be fined and blocked. The required set depends on the connection method, such as desktop, web app or mobile, direct or via server, or batch process. A web app via server must send all 16 of these headers:
Gov-Client-Connection-Method: WEB_APP_VIA_SERVER
Gov-Client-Browser-JS-User-Agent: Mozilla/5.0 (Macintosh; Intel Mac OS X 14_5) AppleWebKit/605.1.15
Gov-Client-Device-ID: 3f6c2a1e-8b4d-4e7a-9c11-5d2f0b7e9a44
Gov-Client-Multi-Factor: type=TOTP×tamp=2027-04-06T09%3A15Z&unique-reference=<salted-hash>
Gov-Client-Public-IP: 203.0.113.24
Gov-Client-Public-IP-Timestamp: 2027-04-06T09:15:02.481Z
Gov-Client-Public-Port: 50122
Gov-Client-Screens: width=1920&height=1080&scaling-factor=1&colour-depth=24
Gov-Client-Timezone: UTC+01:00
Gov-Client-User-IDs: <app>=<user-id>
Gov-Client-Window-Size: width=1256&height=803
Gov-Vendor-Forwarded: by=<server-ip>&for=<client-ip>
Gov-Vendor-License-IDs: <product>=<hashed-licence>
Gov-Vendor-Product-Name: <product-name>
Gov-Vendor-Public-IP: <server-public-ip>
Gov-Vendor-Version: <component>=<version>
The practical traps are architectural. HMRC warns that some popular load balancers cannot collect the client's public IP or source port, and the IP timestamp needs millisecond precision in UTC. The device ID must be a UUID stored persistently on the device that does not expire. MFA data relates to users signing in to your software, so password-only apps cannot supply it. Check your WAF, CDN and proxy chain before you write application code.
Authorisation. MTD endpoints are user-restricted and use OAuth 2.0. An access token lasts 4 hours, each refresh token works once, and refreshing invalidates the old access token at once, so guard against race conditions when parallel calls refresh. After 18 months the user must authorise again. Plan the re-consent journey and the agent flow: supporting agents can send in-year updates but not tax returns, and calling a blocked endpoint returns a 403 error.
Path to production. Register a sandbox application, create test individuals, build, then test every endpoint in the minimum functionality APIs. Sandbox calls must include fraud headers, which a specialist team checks. Stateful sandbox scenarios keep test data for 7 days, and Gov-Test-Scenario headers simulate errors. You then send your sandbox application ID to HMRC's software developer support team and complete the Production Approvals Checklist. With new production applications paused and the 2026-27 window closed, a team starting now should build and test in the sandbox and watch for HMRC's early-2027 update before promising customers a date.
Product rules that bite. Automated quarterly submission is allowed, but users remain legally responsible, so build confirmation steps. If you offer a free product, HMRC expects it to stay free for a full annual accounting period, with guidance and support. Watch lifecycle dates: HMRC retired versions 2 of the Individuals Capital Gains Income and Individuals Reliefs APIs on 16 October 2026, and Individual Losses version 6 is due for deprecation on 1 February 2028 and retirement on 1 August 2028. Deprecated endpoints return Deprecation and Sunset response headers.
How eCorpIT can help
eCorpIT is a Gurugram-based technology organisation, founded in 2021, assessed at CMMI Level 5 and MSME certified, with senior-led engineering teams working across AWS, Microsoft and Google platforms. Our application development services team builds bridging tools, landlord and gig-economy platforms and client portals on HMRC's MTD APIs, including the fraud prevention header pipeline, OAuth flows and sandbox testing, while your accountant owns the tax judgement. Talk to us at /contact-us/.
Last updated: 13 November 2026.
