The April 2027 MTD Wave: Which of Your Clients Are Next

The first wave of Making Tax Digital for Income Tax went live in April 2026. The second wave is bigger, and it is only months away.

From 6 April 2027, sole traders and landlords whose qualifying income was over £30,000 in the 2025 to 2026 tax year must use MTD for Income Tax. For most practices, that pulls in a much larger share of the client base than the first wave did. The clients crossing the line this time are also the ones least likely to be ready: smaller businesses, part-time landlords, and people who have never kept anything more digital than a shoebox of receipts.

This guide covers who is caught, how to find them in your client list now, and what to put in place before the first quarterly deadline in August 2027.

Who the April 2027 wave actually catches

HMRC's thresholds step down over three years. Each one is based on a specific earlier tax year:

Three details matter when you apply this to real clients.

Qualifying income is turnover, not profit. HMRC defines it as total income from self-employment and property before expenses. A sole trader turning over £34,000 with a profit of £12,000 is in scope. Many clients will assume they are not, because they think of their income as the profit figure.

Self-employment and property income are added together. A client with £18,000 of self-employed turnover and £14,000 of gross rent is over the line, even though neither source is over £30,000 on its own.

Some income does not count. A share of partnership profit does not count towards qualifying income, and neither do employment income, dividends or pensions.

HMRC checks the Self Assessment return for the relevant year and writes to people who need to start. Don't wait for those letters. By the time a client gets one, your onboarding window is already short.

Find your 2027 cohort now

The 2025 to 2026 returns you are preparing this autumn are the ones HMRC will use. That makes this season the natural point to flag every client who will be affected.

A simple way to do it:

1. Filter by qualifying income. For each sole trader and landlord, add self-employed turnover and gross property income for 2025 to 2026. Flag everyone over £30,000.
2. Take out the partnership-only clients. Their partnership profit share does not count, so they may drop out.
3. Mark the near misses. Clients between £20,000 and £30,000 are next year's cohort. Put them on the same plan, one year later.
4. Score each flagged client on readiness. How do they keep records today? Paper, spreadsheet, or something already digital? That score decides who needs the most help first.

Most practices find the flagged list is longer than expected, and it is weighted towards the clients whose paper receipts already cost the practice the most time.

What changes for these clients from April 2027

For a client in scope, three things change:

• Records must be digital. Business income and expenses need to be kept in software that works with MTD. A clear photo or scan of a receipt is an acceptable record. A carrier bag of paper is not.
• Quarterly updates. Summary totals for each income and expense category go to HMRC four times a year. HMRC does not receive individual receipts, but the totals have to come from somewhere, and they need to be right.
• A final return after the year ends, sent through the same software.

For the standard update periods, the deadlines are 7 August, 7 November, 7 February and 7 May. So a client joining in April 2027 has their first deadline on 7 August 2027. Clients whose accounts run to 31 March can choose calendar update periods instead, but must select that before their first update.

Penalties

HMRC has said it will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year. After that, a late update earns a penalty point, and reaching four points triggers a £200 penalty. So the April 2027 cohort joins with points already in force from day one, unlike the first wave's softer start. There is no soft first year for them.

For the detail of what counts as a compliant record, our complete guide to MTD digital records covers the requirements, and the edge cases most guidance misses covers subscriptions, foreign currency, split receipts and refunds.

Why the second wave is harder than the first

The April 2026 cohort was, on the whole, larger businesses. Many already had bookkeeping software or a reasonably organised approach to records.

The £30,000 cohort is different:

• More paper. Smaller traders are more likely to pay by cash, keep till receipts, and hand everything over once a year.
• More landlords. Many part-time landlords have never thought of themselves as running a business, and don't expect a quarterly obligation.
• Less slack in fees. These are often lower-fee clients, so the extra work of quarterly updates can wipe out the margin if the process is manual.

That last point is the real risk for the practice. Four updates a year, built from paper receipts that arrive late, is four rounds of chasing, keying and reconciling for clients who may be paying the smallest fees on your books.

What to put in place before April 2027

1. A submission method clients will actually use

The single biggest fix is making it easier for the client to send receipts than to keep them. If a client can forward an email receipt, or take a photo of a paper one, in a few seconds, with no login and no new habit to learn, most of them will. Then the records arrive during the quarter, not in a pile the week before the deadline.

Receiptflow gives clients exactly that: an email-forward address and a photo route, with every receipt stored alongside its extracted data so you can find the source record behind any figure.

2. The conversation, once and early

Tell each flagged client this autumn, in plain terms:

• they are likely to be in scope from 6 April 2027;
• what changes, which is digital records and quarterly updates;
• what you are putting in place so they barely have to change anything;
• what you need from them, which is receipts sent as they happen.

Clients who hear this in October have six months to build the habit. Clients who hear it in March start their first quarter already behind. For the questions clients tend to ask, see our guide to answering client MTD questions.

3. A plan for the resistant few

A small number of clients will push back, or will simply not change. Decide now what happens then: a fee adjustment for the extra work, a firmer deadline, or a clear conversation about whether the engagement still works. Telling clients to stop using paper receipts covers how to have that conversation without losing the relationship.

4. Capacity for four peaks a year

Quarterly updates turn one annual peak into four smaller ones. Look at the flagged list against your team's capacity for August, November, February and May, not just January. If the numbers don't work with manual data entry, that is the signal to change the process before April, not after.

A simple timeline

The bottom line

The April 2027 wave is not a rerun of April 2026. It brings in more clients, with more paper and less margin, and with penalty points in force from their first quarter. The practices that come through it well will be the ones that found their cohort this autumn, gave those clients an effortless way to send receipts, and had every habit in place before 6 April.

Start a free Receiptflow trial and set up your 2027 cohort on digital submission before the first quarter begins.