Accountancy software company FreeAgent has warned sole traders and landlords earning more than £30,000 in self-employed income not to leave preparations for Making Tax Digital for Income Tax until the last minute.
From 6 April 2027, HMRC will require all sole traders and landlords above the £30,000 threshold to submit quarterly tax updates digitally, the company said. According to HMRC figures cited by FreeAgent, the lower threshold will bring more than one million sole traders and landlords under the legislation once it comes into force.
FreeAgent said that, up until now, Making Tax Digital for Income Tax rules have only applied to those earning more than £50,000 of self-employed income.
Pressure on accountants
Jon Martingale, Head of Product Management and MTD expert at FreeAgent, warned that the scale of the new intake would put significant strain on the accounting and bookkeeping sector.
"The new threshold is going to introduce the largest number of sole traders and landlords we can expect to see at the one time, so we know, from talking to our partners, that those in the accounting and bookkeeping sector are going to be completely rushed off their feet," he said.
Martingale urged those affected to begin preparing without delay. "My advice to anyone who is going to be included in the new intake is to get up to speed with the rules and regulations of MTD now - don't wait until next year," he said, adding that building the habit of storing tax records digitally ahead of time would make the transition easier.
Further threshold cuts planned
FreeAgent said the earnings threshold will fall again to £20,000 in April 2028, a move expected to bring in another 975,000 people.
As with the existing £50,000 cohort, the company said there will be a 'soft landing' grace period for the first year, with HMRC holding off on issuing penalty points for late submissions from the new cohort for one year.
This story is based on information sent to Small Cap News by FreeAgent on 12 November 2026. See also: Regions and how to send us your news.
Image: Supplied by FreeAgent