MTD ITSA for £30,000 Earners: What Happens in April 2027

From 6 April 2027, the Making Tax Digital for Income Tax Self Assessment (MTD ITSA) threshold drops from £50,000 to £30,000. That brings an estimated 970,000 additional sole traders, freelancers, and landlords into mandatory quarterly digital reporting — most of whom have never had to do anything more than a once-a-year self-assessment return. If your combined gross income from self-employment and UK or foreign property was over £30,000 in the 2025/26 tax year, you are in the 2027/28 cohort. This guide tells you exactly what to do, when to do it, and which mistakes to avoid.

Who is affected from April 2027?

You fall into the £30,000 cohort if all of the following are true:

• Your combined gross income from sole-trader (self-employment) plus UK and foreign rental property was more than £30,000 in the 2025/26 tax year (the year HMRC uses to determine 2027/28 mandation).
• Your combined gross income was £50,000 or less — otherwise you were already mandated from April 2026 under the £50k cohort.
• You file a Self Assessment return for 2025/26 — this is how HMRC identifies you and writes to you with the mandation notice in late 2026.

If you are unsure whether you cross the £30,000 line, the test is gross income, not profit. A sole trader turning over £35,000 with £20,000 of expenses (so £15,000 of profit) is still in scope — the test is the £35,000 turnover, not the £15,000 net. Same logic for landlords: a £32,000 rent roll with £18,000 of expenses puts you in the cohort even though your taxable income is only £14,000.

Use the free VoxaMTD ITSA eligibility checker to confirm which cohort (£50k 2026, £30k 2027, or £20k 2028) you fall into in under a minute.

What's the difference between the £50k and £30k cohorts?

Mechanically, very little. The £30k cohort follows the same MTD ITSA rules as the £50k cohort that started in April 2026 — quarterly updates for each income source, end-of-period statement reconciliations, and a final declaration. The differences are timing and the soft-landing penalty waiver.

The headline difference is the missing soft landing. £50k filers in 2026/27 do not earn penalty points for late quarterly updates — only late-payment penalties apply. £30k filers in 2027/28 do not get that grace year. Miss a quarterly deadline and you earn a point. Earn four points in a rolling two-year window and HMRC issues a £200 fixed penalty, with another £200 every subsequent late submission until you clear the points by filing on time consistently.

What do you need to do before April 2027?

You have roughly 11 months from now (May 2026) to be ready for the 2027/28 tax year. Here is a sensible timeline.

May–June 2026: confirm your status

• Add up your 2024/25 turnover and rental income. If combined was over £30,000, you are likely in the 2027/28 cohort.
• Wait for HMRC's mandation letter. They write to anyone they identify from your 2025/26 return — typically late 2026 or early 2027.
• Do not opt in voluntarily yet — the testing programme has known issues that make voluntary early sign-up riskier than it sounds.

July–December 2026: choose and trial software

• Pick HMRC-recognised MTD ITSA software. The full list is at gov.uk's recognised software page.
• Trial it on the rest of your 2026/27 records — even though you are not mandated, doing one full tax year in MTD-style software gives you the muscle memory.
• Connect bank feeds via open banking. Reconcile transactions weekly rather than scrambling at year end.

January–March 2027: tidy and pre-flight

• File your 2025/26 self-assessment return as normal by 31 January 2027. This is your last "old-style" SA return.
• Pre-flight your MTD setup: dummy quarterly run on Q4 2026/27 data, confirm bank feeds are healthy, confirm HMRC OAuth is paired.
• Categorise any backlog. From 6 April 2027 every transaction must be digitally recorded and categorised at point of capture, not retrofitted at year-end.

April–July 2027: live

• From 6 April 2027 you are mandated. Use software-only entry (no manual paper).
• By 7 August 2027 file your first quarterly update covering Q1 2027/28.
• Then 7 November 2027 (Q2), 7 February 2028 (Q3), 7 May 2028 (Q4), then 31 January 2029 for the final declaration.

What counts as qualifying income?

HMRC's qualifying income test is intentionally narrow. Only two categories count:

• Self-employment turnover. Gross sales from sole-trader trading. Includes Etsy, Vinted, Deliveroo, Uber, Bolt, OnlyFans, freelance design, consultancy, tutoring, dog walking, or any unincorporated trade. Does not include hobby income under £1,000 (covered by the trading allowance).
• Property income. Gross rental receipts from UK property, plus separately gross rental receipts from foreign property. Includes residential, commercial, holiday lets, and rent-a-room income above the £7,500 allowance.

Everything else is excluded from the test:

• PAYE employment salary, bonuses, and benefits in kind.
• Pension income (state, occupational, or private).
• Dividend income from UK or foreign companies.
• Interest from savings accounts.
• Capital gains.
• Partnership profits — partnerships are deferred (no current MTD ITSA mandation date).
• Trust distributions, settlor income, beneficiary distributions.

This means a freelancer earning £80,000 from a PAYE job and £25,000 from sole-trader consultancy is not in MTD ITSA — only the £25,000 counts toward the threshold and £25,000 is below £30,000. The same person with £35,000 of consultancy is in the 2027/28 cohort.

Joint landlords and partnerships — how does this work?

Jointly held property is split for the qualifying income test using the actual ownership share. A couple owning a £40,000-rent flat 50/50 each declare £20,000, neither hits £30,000 from that property alone. If one spouse also has £15,000 of sole-trader income, their combined qualifying income is £35,000 and they fall into the 2027/28 cohort. The other spouse stays at £20,000 and is below threshold.

Partnerships are different. A trading partnership (the kind reported on SA800/SA104) is currently outside MTD ITSA — HMRC paused partnership mandation indefinitely. Partners still file their share of partnership profits on their personal return, but the partnership itself does not currently file MTD ITSA quarterly updates.

For property held in a "property partnership" structure (a formal partnership rather than just joint ownership), the same indefinite pause applies. The vast majority of jointly-owned BTL properties between spouses or family members are not partnerships in HMRC's tax sense — they are joint ownership, and each owner's share counts toward their personal threshold.

What software do you need?

You need software that is HMRC-recognised for the specific year you are mandated. Recognition is per-year because HMRC's API specs evolve — software recognised for 2026/27 must re-certify for 2027/28. The simplest approach is to use a vendor that has been recognised continuously since the start of the £50k rollout in 2026/27, because they have a track record of renewing their certification.

Practical software requirements for the £30k cohort:

• Quarterly update submission for self-employment, UK property, and foreign property income sources — all three if you have all three.
• End-of-period statement (EOPS) submission for each income source — the year-end reconciliation step.
• Final declaration submission — the all-up tax calculation and confirmation.
• Open-banking transaction feed (recommended, not required — but skipping bank feeds means manual data entry every week).
• Per-property accounting if you have rentals — at least one income source, but per-unit reporting is helpful for analysing yield.

VoxaMTD is free for the £30k cohort with no transaction or property limits. The free tier covers all three submission types (quarterly, EOPS, final declaration), unlimited income sources, and works with any UK bank. Set up an account now — even if you do not file your first MTD return until August 2027, having a year of clean data behind you means the first submission takes ten minutes.

Why sign up now if the deadline is April 2027?

Three reasons.

1. Backdated bank feeds. Most open-banking providers, including Finexer (which VoxaMTD uses), backdate transactions 90 days from the date you connect the account. Connecting in March 2027 means you only see January–March 2027 data when you start. Connecting in May 2026 means you have a full year of categorised, reconciled history before you go live.

2. Year-end clean-up is hard. Trying to retrofit a year of paper receipts and PDF bank statements into MTD-format digital records in April 2027 is the worst-case scenario. You'll miss expenses, miscategorise transactions, and likely overpay tax. Doing it in real time across 2026/27 means every transaction is captured fresh.

3. The HMRC pilot is open. Voluntary early sign-up to MTD ITSA is available now. If you pilot during 2026/27 you'll learn the workflow without penalty exposure, because the soft-landing rules apply to early adopters too. Some accountants disagree on whether early sign-up is worth it — the testing programme has had bugs — but trialling the software (without enrolling with HMRC) costs nothing.

Common mistakes the £30k cohort will make

• Assuming the soft landing applies. It doesn't. Penalty points start ticking from your first late quarterly update on 7 August 2027.
• Counting net profit, not gross income. The threshold test is turnover, not taxable profit. Many people will think they are below £30,000 because their profit is, and they will miss the mandation letter.
• Including PAYE in the threshold. A salaried employee with £45,000 PAYE and £10,000 of sole-trader income is not in MTD ITSA — only the £10,000 counts.
• Forgetting foreign property. Foreign rental receipts count toward the threshold and submit as a separate income source.
• Picking the wrong software. A spreadsheet plus bridging software is allowed but fragile. Cloud accounting with bank feeds is the practical choice for most filers.

Get ready early, get free software in place now, and your April 2027 mandation will be a non-event. Start free with VoxaMTD — set up takes 10 minutes and there is no card required.