Making Tax Digital's second wave: why the tax return you file this year decides it

If you're a sole trader in private practice with turnover somewhere between £30,000 and £50,000, there's a decision being made about you right now, and it isn't being made in April 2027. It's being made in the tax return you're gathering the numbers for this autumn.

Making Tax Digital for Income Tax already caught practices over £50,000 this April. The second wave, at £30,000, starts in April 2027, and HMRC works out who's in it by looking at the Self Assessment return for the 2025/26 tax year, the one due by 31 January 2027. This is not tax advice; whether MTD applies to you depends on your own income, expenses and circumstances, and that's a conversation for your accountant.

How HMRC decides, and why the timing catches people out

To work out who's in scope from April 2026, HMRC read the 2024/25 return. To work out who's in scope from April 2027, it reads the 2025/26 return. If your gross qualifying income on that return comes out above £30,000, HMRC is expected to write to you confirming you need to use Making Tax Digital from the following April.

The catch is sequencing. Most people file that return between the autumn and January, some right up against the deadline. The letter arrives after HMRC has processed it, which for anyone filing late in the window can mean the confirmation lands only a few months before the April start date, not the year of runway it feels like right now. And if the letter never turns up (letters go astray, HMRC's processing is not instant) the responsibility to check still sits with you, not with the letter arriving.

The £30,000 line isn't your take-home

The same catch applies here as it did at £50,000, and it's worth restating because it's the single most common misunderstanding: qualifying income is gross turnover from self-employment and property, before you deduct room hire, supervision, professional-body membership, insurance, training or software. It is not profit.

A therapist seeing 10 clients a week at £60 is turning over around £28,600 a year, close enough to the line that a quiet client or a fee rise either way could tip them across it. Someone with a part-time practice alongside employed work, or with a small rental property on top of a modest caseload, can cross £30,000 in combined qualifying income without their practice alone looking anywhere near it. If you have more than one source of qualifying income, HMRC adds them together.

Who this wave pulls in that the first one didn't

April 2026 mostly caught full-time solo practices. April 2027 is a different population: part-time practitioners, therapists still building a caseload alongside other work, associates with a modest private client list on the side, and anyone whose income sits in that £30,000 to £50,000 band that a lot of newly established practices pass through in their first few years.

If that's your situation, the honest read is that you're now the person this change is actually aimed at, in a way you might not have felt when the £50,000 headline passed you by last year.

What to do while the return is still in front of you

1. Ask your accountant now, before the return is filed, roughly where your 2025/26 gross qualifying income lands. Knowing in September beats finding out from a letter next spring.
2. If you're close to £30,000 either way, ask what "close" means for you. A late invoice or a client finishing in March can move the figure either side of the line.
3. Consider signing up voluntarily if you're likely to cross it soon anyway. HMRC allows voluntary early sign-up for people below the mandatory threshold, and using a quarter or two to get used to the rhythm before it's compulsory is a reasonable trade for some practices, though it brings its own penalty regime once you're in, so this is worth discussing with your accountant rather than doing on a whim.
4. Start keeping income and expenses digitally now, whatever the letter says. The practical shift that catches people out isn't the software, it's changing a once-a-year habit into an ongoing one, and that's easier to build gradually than in the weeks before your first quarterly update is due.
5. If you've handed your bookkeeping to an accountant already, ask whether they've flagged you for the 2027 wave, so it isn't a surprise conversation in a year's time.

Faresay records every session and payment as it happens and lets you export them as a CSV, which is the kind of clean income record a quarterly update or a busy accountant can actually use. It doesn't file anything with HMRC and isn't MTD-compatible software in its own right, so whatever bridges that gap (accounting software, bridging software, or your accountant's own systems) is a separate decision from your practice-management tool.

This article describes HMRC rules as they stood in September 2026 and is provided for general information. It is not tax, accounting or financial advice, and it does not take account of your circumstances. Check the current position on GOV.UK and take advice from your accountant before making decisions. Thresholds, dates and the letter process have moved before and may move again.

Faresay is practice management software for UK therapists. See how it works, or compare it with the alternatives.