MTD for Income Tax to cover 2.9 million UK sole traders and landlords by 2028

By April 2028, Making Tax Digital for Income Tax (MTD) will encompass approximately 2.9 million UK sole traders and landlords, according to an analysis by Your Ecommerce Accountant. This expansion, driven by falling income thresholds, will significantly impact UK self-employed individuals and property owners.

HM Revenue & Customs (HMRC) data reveals that 864,000 people currently earn qualifying income above £50,000, making them the first group to be brought into MTD for Income Tax, effective from April 2026. A further 1.077 million people will join the scheme from April 2027, with another 975,000 entering in 2028. Together, these groups represent roughly 2.9 million individuals, based on HMRC's 2023-24 business-population data.

The change will affect sole traders across various industries, including those selling through platforms like Shopify, Amazon, Etsy, and eBay. Eligibility for MTD is determined by gross income from self-employment and property, not by the specific platform used. For ecommerce businesses, the relevant figure is the total qualifying income, not the profit from individual marketplaces.

Beyond submitting an annual tax return, MTD requires businesses to maintain digital records and provide quarterly updates through compatible software. HMRC estimates that 63% of the £50,000-plus income group used commercial software to submit their 2023-24 Self Assessment return, providing context for the transition but not necessarily indicating MTD readiness.

The first mandatory phase of MTD began on April 6, 2026, for sole traders and landlords with qualifying income above £50,000. HMRC estimates that 864,000 individuals fall within this income band. While substantial, this group accounts for less than one-third of the approximately 2.9 million people expected to fall within the eventual £20,000-plus threshold.

Online businesses with transactions spread across multiple marketplaces and payment processors may face additional challenges in maintaining digital records. The underlying tax rules remain the same, but the need for digital bookkeeping can make it more practical for these businesses.

Over the next two tax years, the rollout will significantly expand. HMRC estimates that 1.077 million people will have qualifying income between £30,000 and £50,000, entering MTD in 2027. Another 975,000 individuals with income between £20,000 and £30,000 will join from 2028. Combined, these groups total approximately 2.916 million people, commonly rounded to 2.9 million.

For smaller ecommerce businesses and creators, the later stages bring the system closer to those who may have started as side ventures before growing beyond the qualifying-income threshold. However, HMRC's figures cover self-employed people and landlords nationally, so the numbers do not specifically identify how many of these 2.9 million operate ecommerce businesses.

Commercial software use varied among those in the £50,000-plus income band. HMRC found that 548,000, or 63%, of these individuals used commercial software to submit their 2023-24 Self Assessment return. The remaining 316,000 did not. Software use also differed based on whether a taxpayer had an authorised agent. Among businesses represented by an agent, 78% used commercial software, compared to 21% among businesses without an authorised agent.

For online sellers already dealing with transaction fees, VAT records, and multiple income streams, an ecommerce accountant can act as an authorised agent and manage reporting on their behalf. However, the taxpayer's underlying obligations do not disappear when an agent is appointed.

MTD introduces quarterly reporting, with the first universal quarterly update deadline for the 2026-27 tax year being August 7, 2026. HMRC reported that more than 350,000 sole traders and landlords had signed up for MTD by July 2026, showing that implementation is already underway. However, the 350,000 figure should not be directly divided by the estimated 864,000 people in the first income band to produce a readiness or compliance rate.

HMRC estimates that the transition will impose a net annual administrative burden of approximately £196 million on the population mandated above the £30,000 threshold. This provides an official basis for discussing the cost of the transition without assuming that ecommerce businesses are unaware of or underestimating these costs.

Your Ecommerce Accountant, a specialist UK accountancy firm based in Stansted, England, has analysed HMRC data to provide insights into the rollout of MTD for Income Tax. The firm works with ecommerce sellers, influencers, and content creators, offering services in VAT, marketplace reconciliation, international sales thresholds, and cash-flow management.

This expansion of MTD is set to dramatically alter the tax landscape for UK self-employed individuals and ecommerce businesses, introducing new administrative burdens and requirements for digital record-keeping. As the implementation progresses, businesses will need to prepare to meet these new obligations.

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