Making Tax Digital (MTD) applies to individuals with self-employed income and/or property income.
It’s being introduced in stages over three years, starting from 6 April 2026.
Currently, anyone with £20,000 or less of gross property income and/or self-employment income will not be affected by MTD.
For everyone else, the thresholds and key dates are:
- If your qualifying income is more than £50,000 for the 2024/25 tax year, you must use MTD from 6 April 2026.
- If your qualifying income is more than £30,000 for the 2025/26 tax year, you must use MTD from 6 April 2027.
Under the current plans, the threshold will reduce to £20,000 from April 2028.
Work out your qualifying incomeWhat is qualifying income?
Qualifying income means your gross property income and/or self-employment income.
Gross income means that it doesn’t include any expenses. To work out whether MTD applies, you should consider your turnover, rather than your profit.
It doesn’t apply to partnership profit share, dividend income, savings income, PAYE employment income or pensions income.
If your qualifying income for 2024/25 is more than £50,000, you need to start using MTD for the 2026/2027 tax year. This means you need to sign up by 6 April 2026.
Example: Self-employed – doesn’t meet first threshold
Susie works part-time as a self-employed IT consultant. She also earns interest on savings (not held in an ISA).
During 2024/25, her earnings were:
| Self-employed income | £44,000 |
| Self-employed expenses | £4,000 |
| Interest income | £8,000 |
Although Susie’s total income for the year is £52,000, only £44,000 counts for MTD because interest income is not qualifying income.
As her qualifying income is below £50,000, Susie doesn’t need to sign up for MTD by 6 April.
However, if Susie earns the same amount of self-employment income in 2025/26, she’ll have qualifying income of more than £30,000 and must sign up to MTD by 6 April 2027.
What happens if your qualifying income reduces?
MTD is being introduced in phases, with the income threshold reducing over time.
- If your qualifying income is more than £50,000 for the 2024/25 tax year, you must use MTD from 6 April 2026.
- If your qualifying income is more than £30,000 for the 2025/26 tax year, you must use MTD from 6 April 2027.
Under current plans, anyone with qualifying income over £20,000 in April 2028 will need to start using MTD.
It’s important to keep an eye on your qualifying income each year and see whether MTD will apply to you.
If you’re required to sign up to MTD, you must stay in the system for at least three years. If you need to start using MTD from 6 April 2026, but your qualifying income falls below the relevant threshold in the next year, you must continue using MTD until your qualifying income has been below the threshold for three consecutive tax years.
Example: Self-employed – reduced qualifying income
Doug is a self-employed carpenter. In 2024/25, his self-employment income is £55,000.
As his qualifying income is more than £50,000, he must start using MTD from 6 April 2026.
In 2025/26, Doug decides to reduce his hours as he plans to retire in the next few years. His self-employment income for this year is £28,000. This is below the £30,000 threshold applicable to the 2025/26 tax year. However, as he is already in MTD because of his 2024/25 income, he must continue using MTD until his qualifying income is below the threshold for three consecutive years.
From 2026/27 onwards, the threshold will be lowered (under current plans). Doug would need to have a qualifying income of £20,000 or less in 2026/27 and 2027/28 before he could stop using MTD.
What if you retire or stop self-employment?
Once you’re in MTD, you must continue using it until your qualifying income has been below the threshold for three consecutive years.
However, if you’re in MTD and stop self-employment or stop receiving property income, and therefore no longer have any qualifying income or expenses, you’ll no longer need to report through MTD.
After submitting your final quarterly update, you should tell HMRC that you have stopped self-employment or stopped receiving property income.
Example: Stopping self-employment with no other qualifying income
Doug decides to retire in December 2026.
During the year 2026/27, he earns £24,000 from self-employment, which he reports through MTD. He submits his quarterly update for the period to 5 January 2027 and informs HMRC that he has ceased self-employment.
As he has no other qualifying income, he submits his annual tax return for 2026/27, including all his income and expenses, and then stops using MTD.
Although Doug has savings income and pension income, he no longer needs to use MTD as these don’t count as qualifying income. From 2027/28, he submits a Self Assessment return through HMRC’s online services.
Example: Ceasing self-employment but remaining in MTD due to property income
James has combined self-employment income and property income of £70,000 for 2024/25, so he starts using MTD from 6 April 2026.
In August 2026, he’s offered a job with a company and decides to cease self-employment. From that point, he’s earning a salary of £60,000, taxed under PAYE. He continues to earn property income of £10,000 a year.
As James is already in MTD for 2026/27, he must stay in MTD until his qualifying income has been below the threshold for three consecutive years.
In 2026/27, his qualifying income is £32,000 (£10,000 of property income and £22,000 of self-employment income). This is above the £30,000 threshold, so he remains in MTD.
From 2027/28 onwards, he only has property income of £10,000. This is the first year his income falls below the threshold. If his property income remains at £10,000 per year, he can leave MTD after three consecutive years below the threshold.
He would then return to completing a Self Assessment tax return through HMRC’s online services.
What if you're a joint landlord?
If you let out a jointly owned property and receive property income, you may need to use MTD depending on your total qualifying income for the tax year. There are specific rules for working out your property letting income for tax purposes.
The starting position for joint properties and MTD is that each owner must report their own share of income and expenses.
Working out your joint property income and expenses can be more difficult if only one owner keeps the records of income and expenses. HMRC provides certain easements for joint properties to make digital record-keeping simpler. For example, one of these allows the income to be recorded in the quarterly updates, but the expenses to be recorded annually.
What if you sell your property?
If you sell your property, the sale proceeds are not considered qualifying income for MTD.
However, your property letting income received before the sale does count as qualifying income.
Example: Selling a rental property and leaving MTD
James decides to sell his property in May 2027 and no longer has any property income for MTD.
The income from selling the property is not qualifying income for MTD (although it must be reported for his annual tax return).
His only qualifying income was the property letting income from that property, so he’s no longer within the scope of MTD.
He must complete his quarterly update for Quarter 1 and then notify HMRC that he no longer has any qualifying income for MTD. James would file his annual tax return via MTD for 2027/28.
Can you use MTD voluntarily?
Yes. If your qualifying income is below the threshold, you can choose to sign up voluntarily.
However, you can’t sign up voluntarily if you’re automatically exempt or outside the scope of MTD.
Being outside of the scope of MTD means that you have no qualifying income at all (even though you may have other income that needs to be reported through Self Assessment).
Example: No qualifying income
Isobel has pension income, savings income and dividend income. She also sells an asset and makes a capital gain, which she needs to report on her self-assessment.
She doesn’t have any self-employment or property income.
Isobel can’t use MTD and is therefore outside the scope of MTD.
Find out if you're required to use MTD
