Making Tax Digital for Income Tax is now mandatory for the first group of affected taxpayers.
From 6 April 2026, an individual generally needs to use MTD for Income Tax if the individual is registered for Self Assessment, receives income from self-employment or property, and had qualifying income of more than £50,000 in 2024/25.
Key Takeaways
- The first mandatory MTD phase began on 6 April 2026.
- The £50,000 test is based on qualifying income, not taxable profit.
- Relevant self-employment and property income must be combined.
- Employment income, dividends and pensions do not count towards MTD qualifying income.
- Affected taxpayers must keep digital records and use compatible software.
- Quarterly updates do not replace the annual tax return.
Need Help With MTD?
We help sole traders and landlords check their qualifying income, set up MTD-compatible records and keep quarterly reporting on track.
What Is MTD Qualifying Income?
Qualifying income is total income from self-employment and property before expenses, also known as turnover. It can include income from more than one business or property source.
Example
A taxpayer receives:
- £25,000 in gross rental income; and
- £27,000 in gross self-employment income.
The taxpayer's total qualifying income is £52,000, even if the taxable profit after expenses is considerably lower. This is the example used in HMRC's own qualifying-income guidance.
What Income Does Not Count?
HMRC says MTD qualifying income does not include:
- PAYE employment income;
- an individual partner's share of partnership profit;
- dividends, including dividends from the taxpayer's own company;
- State Pension; or
- private pensions.
What Must Affected Taxpayers Do?
Affected taxpayers or their agents must use compatible software to:
- create, store and correct digital records;
- send quarterly updates to HMRC;
- submit the tax return; and
- pay tax due by the normal deadline.
Tax Myth Buster
My profit is below £50,000, so MTD cannot apply.
The test is based on qualifying gross income before expenses, rather than taxable profit.
Not Sure Whether MTD Applies To You?
We can check your qualifying income across self-employment and property, confirm which phase you fall into and get your digital records set up before your first quarterly update is due.
Request a Free QuoteFrequently Asked Questions
Need Help With MTD?
We support sole traders and landlords with:
- MTD Qualifying Income Review
- Digital Record Keeping
- Quarterly Updates To HMRC
- Self Assessment Tax Returns
- Landlord & Property Tax
