Lower MTD threshold from April 2027 - Landlords Financial | Landlords Bookkeeping Accountants
Under Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), individuals within its scope must keep digital records of their trading and property income and expenses and make quarterly returns and a final declaration to HMRC using software that is compatible with MTD for ITSA. From 6 April 2026, individuals whose combined trading and property income was £50,000 or more in 2024/25 were required to comply with MTD for ITSA.
The MTD for ITSA threshold drops to £30,000 from 6 April 2027 based on income for 2025/26. It will fall to £20,000 from April 2028.
To ascertain whether you will need to join MTD for ITSA from 6 April 2027, you will need to work out your qualifying income for 2025/26. This is your total of trading and property income from all sources before the deduction of expenses.
Example
In 2025/26, Betty had trading income of £28,000 and property income of £11,000. As her combined trading and property income at £39,000 exceeds the threshold, she will be required to join MTD for ITSA from 6 April 2027. It does not matter that individually both her trading income and her property income are below £30,000.
If all qualifying sources of income cease before 6 April 2027, it is important to notify HMRC. Where this is the case, the individual will not need to comply with MTD for ITSA from 6 April 2027. However, if a person has more than one source of income, and at least one of those sources continues, they will still need to comply with MTD for ITSA in respect of the continuing source(s) if their combined trading and property income in 2025/26 was £30,000 or more. This remains the case even if the income from the continuing source(s) was less than £30,000 in that year.
However, if your qualifying income is below the MTD for ITSA threshold for three consecutive years, you can opt out of MTD for ITSA.
If you have yet to submit your 2025/26 tax return, it is advisable to do so sooner rather than later so that you know whether you will need to join MTD for ITSA from 6 April 2027. Once your return has been submitted, HMRC will write to you if you are within MTD for ITSA from that date.
It may be that you need to amend your 2025/26 tax return after you have submitted it. If as a result of the amendments your qualifying income drops below £30,000, you will not need to join MTD for ITSA if your amended return is filed before 6 April 2027. If it is filed after that date and you have signed up for MTD for ITSA, you can opt out. If as a result of the changes, your qualifying income rises to more than £30,000, you will need to join MTD for ITSA from 6 April 2027 if you file your amended return before that date. If the amended return is not filed until after 5 April 2027, you will not need to comply with MTD for ITSA for 2027/28.
Getting ready
If you need to join MTD for ITSA from 6 April 2027, you will need to sign up by visiting the Gov.uk website at www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax. Alternatively, your agent can sign you up.
If you are filing the returns yourself, you will need to source compatible software. HMRC produce a list of suitable software which can be found on the Gov.uk website at www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax. Alternatively, your agent can file the returns on your behalf.
Lower MTD threshold from April 2027 - Landlords Financial | Landlords Bookkeeping Accountants
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