Making Tax Digital: a year without penalty points for April 2027 joiners

Making Tax Digital for Income Tax began in April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold falls to £30,000 from 6 April 2027. Budget 2026 gives the second group the same easement the first had.

A year to get used to it

For Income Tax Self Assessment taxpayers required to join in April 2027, HMRC will not apply late submission penalty points to quarterly updates for the 2027-28 tax year. Points still apply to a late tax return, and late payment penalties still apply to tax paid late.

The updates still have to be sent: you cannot submit your tax return for the year until all four are in. The easement is a safety net for a late update while you learn the software, not a reason to skip them.

Who is exempt, for now

The government will exempt three groups until further notice: those eligible for qualifying care relief, such as foster carers; non-UK resident foreign entertainers and sportspeople; and expected non-resident customers. Secondary legislation will follow before April 2027. People for whom HMRC cannot provide a digital service, including some insolvent customers, also will not have to join.

What to do before April 2027

• Check your 2025/26 self-employment and property income: above £30,000, you join in April 2027.
• Choose software, or bridging software if you keep spreadsheets, and sign up.
• Practise one quarter early, so the first real update is routine.