Compliance
How ‘Making Tax Digital’ Threshold Cuts Affect Sole Traders and Landlords
UK’s mandation threshold for Making Tax Digital (Income Tax) falls to £20,000 from April 2028—this article shows what it means, who’s impacted, and how to stay compliant.
By NomadicTax Research Team • 5-8 min read • May 9, 2026
## What is the change?
From **April 2028**, the UK government will reduce the threshold for mandatory participation in **Making Tax Digital (MTD) for Income Tax** (ITSA) from **£30,000 to £20,000** of qualifying income. This affects sole traders and landlords whose total taxable income from business or property falls between these amounts. ([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))
## Who’s affected?
- Sole traders reporting business profits
- Landlords reporting rental income
- Those with qualifying income between £20,000 and £30,000 per tax year
- Already in scope are those with income above £50,000 (since April 2026) and above £30,000 (by April 2027) ([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))
## What are the new obligations?
Those in scope must:
- Keep digital records using software compatible with MTD ITSA
- Submit **quarterly updates** of business and property income and expenditure
- File an end-of-year declaration (instead of ad-hoc Self Assessment items where relevant) ([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))
## Actionable steps to prepare
1. **Check qualifying income**: Add together gross income from all self-employment and property before expenses to see if you exceed £20,000.
2. **Choose suitable software**: Must be MTD-compatible. Check HMRC’s published list. Costs and usability vary.
3. **Set up quarterly reporting schedule**: MTD-ready software will guide you. Mistakes early on can be costly to rectify.
4. **Maintain digital record-keeping discipline**: Keep receipts, invoices, and expenses organized and coded correctly.
5. **Seek professional advice** if unsure about dual income sources or borderline eligibility.
## Example scenario
Samantha is a landlord with annual rental income of £15,000 before expenses and a separate freelancing gig that brings in £10,000 before costs. Her total qualifying income is **£25,000**, so from April 2028 she must comply with MTD ITSA. She’ll need software, quarterly submissions, and plan for administrative overhead.
## Benefits & challenges
**Pros:**
- More regular insight into tax position; avoids huge year-end surprises
- Better budgeting and cashflow control for small businesses and rental income
- Encouragement to use modern digital tools, reducing errors
**Cons:**
- Initial setup cost (software, training, time)
- More frequent reporting (every quarter) vs annual only
- Risk of penalties for late submissions or errors if systems not fully understood
## Tips for smooth transition
- Trial MTD-compatible software in advance of threshold date
- Automate record capture (e.g., scanning receipts, direct feeds)
- Adjust bank account routines to separate business vs personal cashflows
- Use HMRC’s webinars or resources; attend workshops if offered
- Review tax-planning decisions in light of more frequent reporting
Have no surprise taxable income? Start preparing now. Once April 6, 2028 hits, you'll want digital systems in place already.