April 2027 and the 30,000 pound line: who gets caught in the next MTD wave

The first MTD wave caught landlords who mostly had an accountant already. The second one will not.

Dropping the threshold from 50,000 pounds to 30,000 pounds in April 2027 pulls in a large population of people with two or three properties, who have always filed a Self Assessment return themselves each January and have never kept digital records in any meaningful sense.

Here is who the next wave actually catches, the definition of qualifying income that decides it, and why the answer depends on a tax year that has already finished.

The three thresholds and their dates

April 2026 brought in landlords and sole traders with qualifying income above 50,000 pounds. April 2027 extends it to those above 30,000 pounds. April 2028 reduces the threshold again to 20,000 pounds.

Each step is larger in population terms than the one before it, because the number of people in each income band grows as the threshold falls. The 2027 wave is where most private landlords will meet MTD for the first time.

What qualifying income actually means

This is where people get the answer wrong, usually in their own favour.

Qualifying income is your combined gross income from self-employment and property, before deducting any expenses. Not profit. Not the figure at the bottom of your rental accounts after mortgage interest, agent fees and repairs.

Employment income taxed through PAYE does not count. Pension income does not count. So an employed person with rental income is assessed on the rent alone, but on the gross rent.

The practical consequence is that a landlord with three properties producing 32,000 pounds of rent and 12,000 pounds of costs is inside the April 2027 wave, despite a profit well under the threshold. That gap between gross and net catches a lot of people who assume they are out.

The year that decides it has already happened

Entry is assessed on a prior tax year, so by the time the obligation starts, the year that determined it is closed.

That has a useful implication and an uncomfortable one. Useful, because you can work out your position now rather than waiting. Uncomfortable, because you cannot change the year being tested by adjusting anything today.

If you are close to the line, the honest answer is to check rather than assume, since being wrong means missing a start date rather than merely filing differently. The threshold checker takes the gross figure and tells you which wave you are in.

What changes for you in practice

Quarterly updates replace the single annual return, finalised by a Final Declaration after the year end. Records have to be kept digitally, and submissions made through HMRC recognised software.

The change most people underestimate is not the four submissions. It is that the record keeping has to be continuous. A shoebox reconciled each January does not produce a quarterly update in July, and the habit of doing a year’s bookkeeping in one sitting simply does not survive the format.

Recognised is a specific status, published by HMRC as a list. Software described as MTD ready is not the same thing, and it is worth asking the question directly.

What to do in the next 12 months

Three things, in order of value.

Establish whether you are in the April 2027 wave, using gross property and self-employment income rather than profit. Then move record keeping to something digital and continuous now, while there is no deadline attached, because doing it under pressure in spring 2027 is how errors enter the first submission. Then confirm your software is HMRC recognised rather than merely capable.

Joint ownership and non-resident status both have their own treatment, covered on our MTD for joint landlords and MTD for non-resident landlords pages.

How Rentalize handles this

Rentalize keeps rent, expenses and documents against each property as they happen, which is the shape quarterly reporting needs. The gross figure that determines your MTD wave is a report rather than a reconstruction.

That sits in landlord software for private portfolios, with letting agent software covering agents who produce statements for many owners.

If you would like to see how quarterly figures are produced from live records, you can book a 20 minute walkthrough, or see pricing.

Frequently asked questions

When does the 30,000 pound MTD threshold start?

April 2027. Landlords and sole traders with qualifying income above 30,000 pounds join Making Tax Digital for Income Tax from that point, following the 50,000 pound wave in April 2026.

Is the MTD threshold based on profit or gross income?

Gross. Qualifying income is combined self-employment and property income before expenses, so a landlord can be inside the threshold with a much smaller profit.

Does my salary count towards the MTD threshold?

No. Employment income taxed through PAYE and pension income are excluded. Only self-employment and property income count.

What does MTD actually require?

Digital record keeping and quarterly updates to HMRC through recognised software, finalised by a Final Declaration after the year end, replacing the single annual return.

Is MTD ready the same as HMRC recognised?

No. Recognised is a published status. Software may be capable of the format without appearing on the list, so ask the question directly rather than relying on marketing language.