Digital Nomad
Navigating the New Lower Threshold: What Landlords and Sole Traders Must Know About Making Tax Digital
From April 2028, UK landlords and sole traders with income between £20,000–£30,000 will face new Making Tax Digital obligations — here’s how to plan ahead.
By NomadicTax Research Team • 5-8 min read • April 28, 2026
## Understanding the Threshold Shift
The UK government has announced that **from 6 April 2028**, the mandation threshold for Making Tax Digital (MTD) for Income Tax will be **lowered from £30,000 to £20,000** in qualifying gross income (business + property sources). ([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)) This change won’t impact those already above £30,000 until 2027, but it will bring approximately **970,000 additional individuals** into mandatory digital reporting. ([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 and When
| Category | Current Mandate Threshold | New Threshold & Start Date |
|---------|----------------------------|------------------------------|
| Sole traders / landlords with qualifying income over £50,000 | Mandatory from 6 April 2026 | Already in scope |
| Those with income between £30,000–£50,000 | Mandated from 6 April 2027 | Already committed |
| Those with income £20,000–£30,000 | Voluntary now or not in scope yet | Mandated from 6 April 2028 |
Small-scale businesses still have options to **opt in voluntarily** before mandate takes effect. ([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))
## Compliance Requirements: Software & Reporting
Once you’re in scope, these are the key obligations:
- Maintain **digital records** of income and expenses using MTD-compatible software. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
- Submit **quarterly updates** of business and/or property income and expenses. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
- Complete a final annual return (End Period Statement) to reconcile accounts. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
Guidance clarifies rules for jointly let properties, foreign property income, and whether profits share from partnerships count as qualifying income. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
## Penalties & Support
The new system includes:
- A **points-based penalty regime** for late or missed quarterly updates or annual submissions. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
- More differentiated penalties for late payments tied to timing and amount. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
- HMRC will write to taxpayers ahead of obligation dates to help with preparation. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6807527fe16c376084e7c751/making-tax-digital-for-income-tax-agent-toolkit.pdf?utm_source=openai))
## Actionable Steps You Can Take Now
1. **Check your qualifying income**: Add up your gross business + rental income to see if you’ll fall into a new threshold band by 2028.
2. **Review current software systems**: Ensure your accounting package is MTD-compatible, or plan to migrate.
3. **Get organised with record-keeping**: From Q1 2026, if you’re mandated, quarterly updates require items like income, expenses, etc., in digital form. Build routine now.
4. **Stay informed about exemptions and reliefs**: Some taxpayers may be exempted or have simplified reporting — read HMRC guidance. ([gov.uk](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/updates?utm_source=openai))
5. **Factor additional time into your workflows**: With quarterly methods, timing becomes more frequent.
## Example Scenario
_Sophie lets one property and runs a small online shop. Her combined gross income in 2027-28 is £28,000._
- Under the current regime, she won’t be obliged to use MTD until April 2028. However, it's voluntary earlier.
- She must make quarterly updates for both property and business income once in scope.
- By keeping proper records ahead of that date, she avoids scrambling when the mandate hits.
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*By planning now, and understanding the timeline and requirements, landlords and sole traders in the £20,000-£30,000 band can ensure smooth adaptation to the expanded MTD system.*