Thousands of UK sole traders and landlords are now affected by a major HMRC tax reporting change linked to the £50,000 income threshold.
Making Tax Digital (MTD) for Income Tax became mandatory from 6 April 2026 for sole traders and landlords whose qualifying income was more than £50,000 in the 2024/25 tax year, unless they qualify for an exemption.
Who is affected?
The £50,000 threshold does not apply to every employee earning more than £50,000.
Instead, the rule currently applies to people with qualifying income from self-employment and property income.
Those within the rules must keep digital records using compatible software and send quarterly updates to HMRC. They will still need to complete their annual tax return and pay their tax bill under the normal Self Assessment deadlines.
HMRC expected around 780,000 sole traders and landlords with qualifying income above £50,000 to enter the system from April 2026.
The threshold is falling
The £50,000 threshold is only the first stage of the MTD rollout.
From 6 April 2027, the requirement will extend to sole traders and landlords with qualifying income of more than £30,000.
From April 2028, the threshold is scheduled to fall again to £20,000.
This means people who are currently below £50,000 could still be brought into the system in the future.
What will taxpayers have to do?
Those affected will generally need to:
- Keep digital records of business and property income and expenses.
- Send quarterly updates to HMRC using compatible software.
- Submit their annual tax return.
- Continue paying their tax by the relevant Self Assessment deadline.
The quarterly updates are summaries of income and expenses rather than four additional tax returns.
Check if the rule applies to you
HMRC has been contacting people who need to use MTD. From September 2026, HMRC began signing up eligible taxpayers who had not registered themselves but whose records showed qualifying income above the relevant threshold.
Importantly, earning more than £50,000 from a normal job does not automatically put someone into MTD for Income Tax.
The key figure is qualifying income from self-employment and property.
Anyone who is unsure whether they are affected should check their HMRC online account and the latest GOV.UK guidance. Some people may also qualify for an exemption if they cannot reasonably use digital services.