Stansted, England – September 09, 2026 -- Making Tax Digital for Income Tax will expand to roughly 2.9 million UK sole traders and landlords by April 2028 as HMRC lowers the qualifying-income threshold in stages, according to an analysis by Your Ecommerce Accountant based on HMRC's 2023-24 business-population data.
864,000 taxpayers entered the first mandatory phase in April 2026
HMRC data shows 864,000 individuals with qualifying self-employment or property income above £50,000 became subject to mandatory MTD for Income Tax from 6 April 2026. This group is now operating within its first mandatory tax year, having previously prepared for the rules rather than complied with them.
Two million more taxpayers join in 2027 and 2028 as thresholds fall
A further 1.077 million people with income between £30,000 and £50,000 enter the regime from April 2027. Another 975,000 with income between £20,000 and £30,000 follow from April 2028. Combined with the first phase, the three bands total approximately 2.916 million people, commonly rounded to 2.9 million.
Eligibility depends on gross income, not the platform used
The requirement applies to sole traders across Shopify, Amazon, Etsy and eBay, with eligibility determined by combined qualifying gross income from self-employment and property rather than by marketplace. Sellers operating across several channels must consolidate income for threshold purposes rather than assess each platform separately.
63% of the £50,000-plus group used commercial software for 2023-24 returns
Among the 864,000 taxpayers in the first band, 548,000, or 63%, used commercial software to submit their 2023-24 Self Assessment return, while 316,000 did not. HMRC's data measures how annual returns were filed rather than whether taxpayers already maintained MTD-compatible digital records.
Agent representation correlates with higher software adoption
Among £50,000-plus businesses with an authorised agent, 78% used commercial software, compared with 21% for those without an agent. HMRC's figures show an association between agent representation and software use rather than a causal link.
Quarterly updates are now mandatory, with penalty points suspended for 2026-27
Mandated taxpayers must keep digital records and submit quarterly updates through compatible software, with the first universal quarterly deadline for 2026-27 falling on 7 August 2026. HMRC has suspended penalty points for late quarterly updates during 2026-27, though the underlying requirement remains in force. By July 2026, more than 350,000 sole traders and landlords had signed up for MTD for Income Tax, though this figure and the 864,000 historical estimate cover different reference periods and are not directly comparable.
HMRC estimates a £196 million annual administrative burden
HMRC's impact assessment put the continuing net annual administrative cost for the population mandated above the £30,000 threshold at approximately £196 million. The figure applies to the mandated population as a whole rather than forecasting costs for individual online sellers, whose transition will vary depending on existing record-keeping systems.