Making Tax Digital from April 2027: does it apply to your cafe, pub or restaurant?

Your accountant has mentioned "quarterly updates", and you want a straight answer before you buy software you may not need. HMRC says more than 864,000 sole traders and landlords are in scope of Making Tax Digital for Income Tax in its first year, and the line drops to £30,000 in April 2027 (HMRC, 23 July 2026).

From 6 April 2027, Making Tax Digital (MTD) for Income Tax applies to you if you run your cafe, pub or restaurant as a sole trader, or let property, and your 2025 to 2026 tax return shows qualifying income over £30,000. Qualifying income is turnover before expenses, not profit. A limited company's trade is outside it. Partnerships are not in it yet, and HMRC has set no date. Over £50,000 on the 2024 to 2025 return means you started in April 2026.

Last checked: 5 November 2026.

Does Making Tax Digital apply to my restaurant?

Start with how the business is owned, then look at the numbers on last year's return. The rules below come from HMRC's Use Making Tax Digital for Income Tax guidance (updated 16 October 2026), its qualifying income guidance (updated 11 September 2026) and its exemptions page (updated 28 May 2026).

DOES MTD FOR INCOME TAX APPLY TO ME FROM 6 APRIL 2027?

1. Who owns the business?
   Limited company ............... The company's trade is out of scope.
                                   Go to step 5 for your own rental income.
   Partnership ................... Not in scope yet. HMRC will set a date later.
                                   Go to step 5 for your own rental income.
   Sole trader ................... Go to step 2.

2. Did you stop trading as a sole trader before 6 April 2027
   (sold the cafe, closed, or moved the business into a company)?
   Yes ..... Tell HMRC before 6 April. If you have no self-employment or
             property income left, MTD does not apply.
   No ...... Go to step 3.

3. Add up your qualifying income from your 2025 to 2026 tax return:
   turnover from every sole trader business
   + gross UK property income (rent before expenses)
   = qualifying income

4. Compare it with the thresholds:
   Over £50,000 on your 2024 to 2025 return .... In since 6 April 2026
   Over £30,000 on your 2025 to 2026 return .... In from 6 April 2027
   Over £20,000 on your 2026 to 2027 return .... In from 6 April 2028
   £20,000 or less ............................. Exempt

5. Do you personally receive rent, for example from letting the
   premises to your own company, or a flat above the shop?
   Yes ..... Count that rent at step 3. Directors and partners can be
             in MTD as landlords.
   No ...... If you are a company director or partner, MTD for Income Tax
             does not apply to you yet.

6. Check the exemptions page if you are digitally excluded
   (for example by age, disability or lack of internet access).

Three points the decision tree turns on.

It is turnover, not profit. HMRC defines qualifying income as "your total income from self-employment and property", before expenses. A cafe taking £45,000 a year and making £9,000 profit is in.

Income is added together. A sole trader with a £24,000 coffee cart and a £7,000 flat to let has £31,000 of qualifying income, so both go into MTD from April 2027, even though neither crosses the line alone.

VAT can count. If you use the cash basis and are VAT registered, HMRC says you can choose to include or exclude VAT when you declare business income, and if you include it, it counts towards qualifying income. Ask your accountant which your return used before you assume you are under the line.

Limited companies. HMRC describes MTD for Income Tax as "a new way for sole traders and landlords to do Self Assessment". Its guidance says you "do not need to add partnership income, income from a limited company or employment income" to MTD, and lists dividends "including those from your own company" as income that does not count. A company's profit is taxed through Corporation Tax. If the company is VAT-registered, it already keeps digital VAT records under MTD for VAT, a different scheme; see our VAT threshold guide.

Partnerships. HMRC's exemptions page says "Partnerships do not currently need to use Making Tax Digital for Income Tax" and that it will set out the timeline later. A partner's share of the restaurant's profit does not count. Rent the partner receives personally still does.

How many sole-trader restaurants and pubs are affected?

Most registered sole-trader venues are already well above £50,000, so for them April 2027 changes nothing: on the numbers, they were due in from April 2026. Our analysis of the ONS UK Business Counts by turnover band (Nomis dataset NM_199_1, United Kingdom, March 2026) shows it.

Source: our analysis of ONS UK Business Counts, enterprises by legal status (sole proprietor) and turnover size band, United Kingdom, March 2026 (Nomis dataset NM_199_1, retrieved 5 November 2026). Counts are rounded to the nearest 5, so rows may not add exactly.

Three things follow from the table.

1. 97% of registered sole-trader venues report turnover of £50,000 or more. Register turnover is not the same as qualifying income on a tax return, and it can lag a year, but the gap is wide. If you are a sole trader with staff or a VAT number, check your 2024 to 2025 return: you are probably already over the line.
2. The £30,000 line is aimed at businesses this register does not see. It covers only businesses registered for VAT or PAYE. A one-person coffee cart, market stall, food truck or supper club with no staff and takings under the £90,000 VAT threshold is not on it. That is the owner April 2027 catches.
3. Partnerships wait. The same register counts 7,555 partnerships in these four trades, 2,755 of them pubs, all outside MTD for Income Tax until HMRC sets a date. How the trade splits between sole traders, partnerships and companies is in our Self Assessment guide.

What is the threshold for Making Tax Digital in April 2027?

£30,000 of qualifying income, measured on your 2025 to 2026 Self Assessment return, which is due by 31 January 2027. HMRC's guidance sets out the stages:

New openings are scaled up to a full year. HMRC says it will annualise a sole trader's qualifying income: "if you've only been trading for 6 months in your first tax year, we'll double your income". A cafe that opened in October 2025 and took £20,000 by 5 April 2026 counts as £40,000, so it starts MTD in April 2027. You only need to use MTD once you are registered for Self Assessment and have submitted a return, so a cafe that opened in summer 2026 is first tested on its 2026 to 2027 return, against the £20,000 line, for April 2028.

What counts towards the £30,000 for a cafe or pub:

• Everything the business takes, before expenses: food, drink, takeaway and delivery sales.
• Gross rent from any UK property you let personally, or your share of rent from a jointly owned property.
• Not counted: wages from a job, your share of a partnership's profit, dividends, pensions or savings interest.

What do you have to do under MTD for Income Tax?

Three things change for a sole trader in MTD:

1. Keep digital records of business income and expenses in software that works with MTD. HMRC keeps a list of compatible software, and spreadsheets can stay if they connect through bridging software.
2. Send a quarterly update from that software every 3 months. Each update covers the tax year so far, from 6 April to the end of the period, so a mistake in quarter one can be corrected in quarter two.
3. Submit your tax return through the software by 31 January after the tax year ends. Tax is still paid on the usual dates.

The update deadlines are fixed in HMRC's send quarterly updates guidance: 7 August, 7 November, 7 February and 7 May. For an owner who joins on 6 April 2027:

If your accounts run from 1 April to 31 March, HMRC says you should use calendar update periods instead (1 April to 30 June, and so on), with the same deadlines. Choose before you send the first update: you cannot switch for the rest of that tax year.

Penalties. HMRC is not applying penalty points for late quarterly updates in 2026 to 2027 only. From 2027 to 2028, each missed update deadline or late return earns one point, and 4 points bring a £200 penalty. MTD users also move to new late payment penalties from the year they join, according to HMRC's MTD penalties guidance. An owner joining in April 2027 gets no first-year easing on updates, so plan for points from the first quarter.

What should a restaurant owner do before April 2027?

MTD FOR INCOME TAX: BEFORE 6 APRIL 2027

[ ] Confirm how the business is owned: sole trader, partnership or company
[ ] Add up turnover and gross rent for 2025 to 2026 (6 April 2025 to 5 April 2026)
[ ] Ask your accountant whether turnover on the return includes VAT
[ ] File the 2025 to 2026 return by 31 January 2027
[ ] Sold, closed or incorporated before 6 April 2027? Tell HMRC
[ ] If qualifying income was over £30,000: choose MTD-compatible software
    with your accountant
[ ] Standard or calendar update periods? Decide before the first update
[ ] Decide who sends the quarterly updates: you or your accountant
[ ] Set up a monthly routine: till takings, card and delivery payouts,
    supplier invoices and wages into the software every month
[ ] Keep tips and service charge apart from sales in the records
[ ] Put the four update dates in the diary (7 August, 7 November,
    7 February, 7 May)
[ ] Landlord of your own premises? Check your rent against the thresholds
[ ] Check the exemptions page if you cannot use software

The monthly routine matters more than the software choice. Restaurants run on daily takings, and a quarter is about 90 days of them. An owner who loads one month at a time spends half an hour on each update. One who leaves it to the deadline rebuilds three months of card payouts, delivery statements and cash, and the 7 February update lands a week after the January tax bill.

The other April 2027 changes, the wage rise and the new rates reliefs, are in our Autumn Budget 2026 guide. Check your position with your accountant for your situation.

Making Tax Digital for Income Tax: what has changed

• 2 September 2025: gov.uk's MTD policy paper is updated to clarify when the government set out plans to legislate the lower thresholds.
• 29 January 2026: HMRC's qualifying income guidance confirms a partner's share of partnership profit does not count.
• 6 April 2026: MTD for Income Tax starts for sole traders and landlords over £50,000.
• 28 May 2026: HMRC's exemptions page confirms partnerships do not currently need to use MTD.
• 23 July 2026: HMRC says more than 864,000 people are in scope and that no penalty points apply to late quarterly updates in the first year.
• 16 October 2026: HMRC's guidance adds how to confirm a quarterly update was sent and how to change update periods.

We will update this guide when HMRC sets a date for partnerships or changes the thresholds.

Can TablePort handle this for you?

TablePort can feed the monthly routine, but it does not send anything to HMRC:

1. Use the daily report for takings. Each day's sales are recorded, so a quarter's income is a total, not a reconstruction.
2. Send sales to your accounting software. Sales sync to Xero or QuickBooks, which your accountant can use for the quarterly updates.
3. Hand over accounting exports. Daily sales, tips, tax, voids and comps export in a form your accountant can use, with tips kept apart from sales.

The limit: TablePort is not MTD software. Your accounting software or your accountant sends the quarterly updates and the return. See the POS page for reports and exports.