Compliance
Digital Compliance Deep Dive: Preparing for the £20,000 MTD Threshold in April 2028
The UK government is lowering the Making Tax Digital threshold from £30,000 to £20,000 from 6 April 2028—bringing nearly a million more sole traders and landlords into the digital tax fold.
By NomadicTax Research Team • 5-8 min read • May 11, 2026
## Overview
From **6 April 2028**, **sole traders and landlords** with total qualifying income between **£20,000 and £30,000** will be mandatorily required to use *Making Tax Digital (MTD) for Income Tax Self Assessment*. This policy extends digital record-keeping and quarterly reporting obligations to approximately **970,000** additional taxpayers. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
## Key Requirements
- **Digital records**: All income and expenses must be kept in compatible software or via a valid bridging tool if spreadsheets are still used. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- **Quarterly updates**: Provide HMRC with income and outgoings every three months. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- **End-of-year return**: Finalise the tax return based on these updates and any non-business income. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
## Actions You Should Take Now
- **Evaluate your current accounting**: Are you using spreadsheets? If yes, assess whether you need bridging software or a full featured solution.
- **Check software compatibility**: Look for HMRC-endorsed software or those that advertise compliance with MTD-ITSA requirements.
- **Plan for familiarity costs**: HMRC estimates £380 million in transitional costs among those moving into scope. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- **Consult with agents or accountants**: They can help setup systems and may manage the quarterly submissions for you.
## Impacts & Considerations
- **Compliance cost**: While costs are estimated to rise for those newly in scope, most established businesses should be familiar with MTD compliance procedures. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
- **Time management**: Quarterly updates require regular attention; irregular income may complicate estimates.
- **Benefit of digitalisation**: Improved accuracy, fewer errors, and smoother HMRC interactions are key positives. ([gov.uk](https://www.gov.uk/government/publications/making-tax-digital-for-income-tax-self-assessment-reducing-the-mandation-threshold-from-30000-to-20000-from-april-2028/reduction-of-the-mandation-threshold-from-30000-to-20000-from-april-2028?utm_source=openai))
## Example Scenario
> *Sarah lets out two small properties and has a hobby business making jewellery. Her combined gross income from these sources in a tax year is £25,000. As of April 2028, she will be **required** to keep digital records and submit quarterly updates under MTD-ITSA. If she waits, she risks non-compliance penalties.*
MDT threshold reduction is a signal that **digital compliance is here to stay**, and smaller income levels will not escape the requirement. If you're in this income band, the sooner you adapt, the smoother your tax year will be.
**Category**: Compliance