HMRC data shows 864,000 people fall into the first £50,000-plus MTD income band, with more than two million additional sole traders and landlords entering as the threshold falls in 2027 and 2028.
STANSTED, England, Sept. 4, 2026 /PRNewswire/ — Making Tax Digital for Income Tax is set to encompass approximately 2.9 million UK sole traders and landlords by April 2028 as the qualifying-income threshold falls in stages, according to an analysis published by Your Ecommerce Accountant.
HM Revenue & Customs data identifies 864,000 individuals with qualifying self-employment or property income above £50,000, the first group brought into mandatory MTD for Income Tax from 6 April 2026. A further 1.077 million people fall within the £30,000 to £50,000 band scheduled to enter from April 2027, followed by another 975,000 with income between £20,000 and £30,000 from April 2028. Together, the three groups represent roughly 2.9 million people based on HMRC’s 2023-24 business-population data.
The change affects sole traders across industries, including people selling through Shopify, Amazon, Etsy and eBay. MTD eligibility isn’t determined by the platform a business uses. Instead, it depends on qualifying gross income from self-employment and property.
MTD also involves more than submitting an annual tax return online. Those within the scheme must maintain digital records and submit quarterly updates through compatible software. Before the first mandatory phase, HMRC data showed that 63% of the £50,000-plus population used commercial software to submit their 2023-24 Self Assessment return. That figure provides useful context, but it isn’t a measure of MTD readiness.
864,000 Entered the First MTD Phase
The first mandatory stage of MTD for Income Tax began on 6 April 2026 for sole traders and landlords with qualifying income above £50,000.
HMRC estimates that 864,000 individuals fall within this income band based on 2023-24 tax data. While substantial, that first group accounts for less than one-third of the approximately 2.9 million people expected to fall within the eventual £20,000-plus threshold.
For ecommerce businesses, the relevant figure is qualifying income rather than profit from a particular marketplace. Someone trading across Shopify, Amazon and Etsy doesn’t assess each platform independently for MTD purposes. Gross income from applicable self-employment and property sources is considered together.
That can be particularly relevant for online businesses whose transactions are spread across several marketplaces, storefronts and payment processors. The underlying tax rules are the same as for other sole traders, but keeping records across several channels can make digital bookkeeping a more practical consideration.
The April 2026 phase is already live. Businesses in the £50,000-plus group are now operating within the first mandatory tax year rather than preparing for a future introduction.
More Than Two Million More Enter by 2028
The rollout expands considerably over the next two tax years. HMRC estimates that 1.077 million people have qualifying income between £30,000 and £50,000. That group is scheduled to become subject to MTD for Income Tax from 6 April 2027. Another 975,000 individuals fall into the £20,000 to £30,000 band scheduled to enter from April 2028.
Combined with the first phase, these groups total approximately 2.916 million people, commonly rounded to 2.9 million. The staged timetable means most of the eventual MTD population hadn’t yet reached mandatory participation as of August 2026. More than two million additional sole traders and landlords fall into the two income bands due to enter during 2027 and 2028.
For smaller ecommerce businesses and creators, the later stages bring the system closer to businesses that may have started as side ventures before growing beyond the qualifying-income threshold.
However, HMRC’s figures cover self-employed people and landlords nationally. They don’t identify how many of those 2.9 million people operate ecommerce businesses, so the figures shouldn’t be presented as ecommerce-specific population estimates.
Commercial Software Use Wasn’t Universal
Compatible software and digital record keeping are central to MTD, making existing software use relevant context for the transition.
Among the 864,000 people in the £50,000-plus band, HMRC found that 548,000, or 63%, used commercial software to submit their 2023/24 Self Assessment return. The remaining 316,000 didn’t.
The figure doesn’t mean that 37% were unprepared for MTD. HMRC’s statistics measure how annual returns were submitted, not whether taxpayers already maintained compatible digital bookkeeping systems or were ready to provide quarterly updates.
Software use also differed sharply according to whether a taxpayer had an authorised agent. Among £50,000-plus businesses represented by an agent, 78% used commercial software to submit their annual return, compared with 21% among businesses without an authorised agent.
That difference shows an association between agent representation and commercial-software use, but it doesn’t prove that using an accountant caused businesses to adopt software.
For an online seller already dealing with marketplace statements, transaction fees, VAT records and multiple income streams, an ecommerce accountant can act as an authorised agent and manage reporting on the seller’s behalf. The taxpayer’s underlying obligations, however, don’t disappear when an agent is appointed.
MTD Adds Quarterly Reporting
One of the main practical differences between MTD and conventional online Self Assessment is the requirement for reporting during the tax year.
Mandatory users must keep digital records and send quarterly updates through MTD-compatible software. For the first mandatory group, the first universal quarterly update deadline for the 2026-27 tax year was 7 August 2026.
A quarterly update isn’t the same as filing four annual tax returns. These updates provide information during the year, while taxpayers still complete the relevant end-of-year process.
HMRC isn’t applying penalty points for late quarterly updates during the 2026-27 tax year, although the updates remain required. The temporary penalty treatment shouldn’t be interpreted as making quarterly reporting optional.
By July 2026, HMRC reported that more than 350,000 sole traders and landlords had signed up for MTD for Income Tax. That figure shows that implementation is already under way.
However, the 350,000 sign-up figure shouldn’t be divided directly by the historical estimate of 864,000 people in the first income band to produce a readiness or compliance rate. The figures have different reference periods and aren’t directly comparable in that way.
HMRC Estimates a £196 Million Annual Burden
The move to digital records and more frequent reporting also brings administrative costs. HMRC’s impact assessment estimated a continuing net annual administrative burden of approximately £196 million for the population mandated above the £30,000 threshold. That provides an official basis for discussing the cost of the transition without assuming that ecommerce businesses specifically are unaware of or underestimating those costs.
The estimate applies to the relevant mandated population as a whole. It isn’t a forecast of what an individual online seller will spend on software, bookkeeping or professional support. Businesses that already maintain compatible digital records may face a different transition from those using paper records, spreadsheets or software that doesn’t support MTD submissions. Ecommerce businesses may already operate digitally, but digital sales records alone don’t necessarily mean their accounting process satisfies MTD requirements.
Methodology
Your Ecommerce Accountant analysed published HM Revenue & Customs data covering the Making Tax Digital for Income Tax business population, rollout timetable, commercial-software use, authorised-agent representation, administrative impact and 2026 implementation.
The core figures use HMRC’s 2023-24 Income Tax Self Assessment business-population data. Of 7.02 million individuals with self-employed and/or landlord businesses, approximately 2.9 million fall within the eventual £20,000-plus MTD bands. The analysis separates them into the £50,000-plus group entering from April 2026, the £30,000 to £50,000 group entering from April 2027, and the £20,000 to £30,000 group entering from April 2028.
Commercial-software figures describe how taxpayers submitted their 2023-24 Self Assessment returns. They don’t directly measure whether those taxpayers were prepared for MTD-compatible bookkeeping or quarterly reporting.
No proprietary Your Ecommerce Accountant survey or client dataset was used. The analysis doesn’t make claims about how aware or prepared ecommerce sellers are unless supported by HMRC data.
Frequently Asked Questions
The following questions address how Making Tax Digital applies to ecommerce businesses, how qualifying income works across multiple platforms, what quarterly reporting involves, and the role authorised agents can play in helping businesses meet their obligations.
Does Making Tax Digital apply to Shopify, Amazon, Etsy and eBay sellers?
MTD can apply to sellers using any of these platforms if they’re sole traders and their qualifying self-employment and property income exceeds the relevant threshold. The platform itself doesn’t determine whether MTD applies.
What counts as qualifying income if an online seller uses several platforms?
Qualifying income is based on gross income from self-employment and property before expenses. For sellers operating across several marketplaces, qualifying income is considered across applicable income sources rather than separately for each platform.
Does Making Tax Digital mean sole traders have to file four tax returns a year?
Mandatory users must maintain digital records and provide quarterly updates through compatible software, alongside the relevant end-of-year reporting process. Quarterly updates and an annual tax return aren’t the same thing.
What happens if an ecommerce seller misses a quarterly update?
Quarterly updates remain required, but HMRC isn’t applying penalty points for late quarterly updates during the 2026-27 tax year. The longer-term system uses a points-based penalty regime.
Can ecommerce accountants manage MTD reporting for an online seller?
Ecommerce accountants can act as authorised agents and assist clients with bookkeeping, compatible software and MTD submissions. HMRC data shows that agent-represented taxpayers had higher levels of commercial-software use, although that doesn’t establish causation.
About Your Ecommerce Accountant
Your Ecommerce Accountant is a specialist UK accountancy firm based in Stansted, England, founded in 2019 and trading through Your Cloud Accountant Limited. It works with ecommerce sellers, influencers and content creators, including businesses operating through Shopify, Amazon, Etsy and eBay, with services covering VAT, marketplace reconciliation, international sales thresholds and cash-flow management.
Media Contact
Ben Sztejka
Email: benjamin@yourecommerceaccountant.co.uk
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