UK Expands Tax Digitalization for 2.9 Million Sole Traders by 2028

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The United Kingdom's Making Tax Digital (MTD) for Income Tax is set to significantly broaden its scope, encompassing an estimated 2.9 million sole traders and landlords by April 2028. This expansion is occurring through a phased reduction of the qualifying income threshold. Analysis from Your Ecommerce Accountant suggests that by April 2028, individuals with gross qualifying income above £20,000 will be subject to the MTD regime. This follows the initial phase for those with incomes over £50,000, which commenced on April 6, 2026. A further group with incomes between £30,000 and £50,000 is scheduled to join in April 2027.

The MTD initiative requires participants to maintain digital records and submit quarterly updates using compatible software, moving beyond the traditional annual tax return. HM Revenue & Customs (HMRC) data indicates that prior to the first mandatory phase, 63% of the highest income bracket (£50,000-plus) were already utilizing commercial software for their submissions, though this figure does not confirm MTD readiness.

The implications extend to sole traders across numerous sectors, including those engaged in e-commerce through platforms such as Shopify, Amazon, Etsy, and eBay. Eligibility for MTD is based on total qualifying gross income from self-employment and property, irrespective of the specific platform used for sales. For online businesses operating across multiple marketplaces, maintaining consistent digital bookkeeping practices across all channels is becoming increasingly crucial.