MTD drops to £30,000: what Dorset traders and landlords should do

Making Tax Digital for Income Tax arrived on 6 April 2026 for sole traders and landlords with more than £50,000 of qualifying income. For many people in Verwood, Ferndown and across East Dorset it felt like something that affected “bigger” businesses.

That’s about to change. From 6 April 2027, the threshold drops to £30,000 – and a year later, to £20,000. That brings in a huge number of tradespeople, freelancers, small shop owners and landlords. If that’s you, the next few months are the ideal time to prepare.

Step 1: Work out your qualifying income

Your qualifying income is your gross self-employment turnover plus your gross rental income – before any expenses. HMRC will use your 2025–26 tax return (due by 31 January 2027) to decide whether you’re in from April 2027.

A few examples of people who are often surprised to find themselves included:

• A plumber in West Moors turning over £34,000 a year, even though profits are much lower after materials and van costs
• A landlord in Ringwood with two houses bringing in £32,000 of rent between them
• A part-time consultant in Wimborne earning £18,000 who also lets a holiday cottage for £15,000

Step 2: Choose your software

You’ll need software that works with MTD for Income Tax. Popular options include Xero, QuickBooks and Sage, and HMRC publishes a list of other compatible products. Some people can keep using spreadsheets with “bridging” software, but for most small businesses a proper cloud package is simpler and saves time.

Step 3: Start keeping digital records now

You don’t have to wait until April 2027. Getting your records into software now means you can iron out any problems in your own time, rather than trying to learn a new system against a deadline. Connect your bank feed, download a receipt app and start capturing expenses as you go.

Step 4: Separate business and personal

If your business and personal spending go through the same account, now is the moment to open a separate business account. It makes digital record-keeping dramatically easier and cuts the time (and cost) of bookkeeping.

Step 5: Put the deadlines in your diary

Quarterly updates are due by 7 August, 7 November, 7 February and 7 May, with a final declaration by 31 January. That’s five submissions a year instead of one, so it pays to have a routine – or someone to do it for you.

Step 6: Decide whether to do it yourself

Some people are happy to submit their own updates. Others would rather not think about it. A bookkeeper can keep your records up to date and handle every submission, which often costs less than people expect – especially once you factor in time saved and expenses you might otherwise miss.

Need a hand?

I help sole traders and landlords across East Dorset get ready for Making Tax Digital. If you’d like me to check whether you’re affected, or to set things up for you, get in touch for a free chat. You can also read my full Making Tax Digital guide.