Making Tax Digital for Income Tax (MTD) is being introduced in stages for sole traders and landlords.
The date you are required to start depends on your qualifying income in an earlier tax year, not your expected income or taxable profits in the year you join.
| MTD start date | Qualifying income threshold | Tax year used to assess income |
|---|---|---|
| 6 April 2026 | Over £50,000 | 2024/25 |
| 6 April 2027 | Over £30,000 | 2025/26 |
| 6 April 2028 | Over £20,000 | 2026/27 |
For example, if your qualifying income was £35,000 in the tax year ended 5 April 2026, you would generally be required to comply with Making Tax Digital from 6 April 2027, even if you expect your income to fall below £30,000 during 2027/28.
Is the Making Tax Digital threshold based on turnover or profit?
The thresholds are based on qualifying income before deducting expenses, rather than taxable profits.
For sole traders, this generally means gross business income before deducting business expenses.
For landlords, it generally means gross rental income before deducting property expenses, such as repairs, insurance, letting agent fees and other allowable costs. It is not based on the profit remaining after those expenses.
If you receive both self-employment income and rental income, the qualifying amounts are added together when determining whether you exceed the relevant threshold.
For example: If your gross self-employment income was £18,000 and your gross rental income was £17,000 during 2025/26, your combined qualifying income would be £35,000. You would generally be required to comply with Making Tax Digital from 6 April 2027, even if your taxable profits were substantially lower.
What if I should already be using Making Tax Digital?
If your qualifying income exceeded £50,000 in 2024/25, you may already have been required to start Making Tax Digital from 6 April 2026.
If you have not yet made the necessary arrangements, you should review your position promptly, including your registration, accounting software, digital records and any outstanding reporting requirements.
The requirements are subject to applicable exemptions, and certain types of income are excluded from the qualifying income calculation.
How can Johnson Accountants help?
Johnson Accountants can help you establish when Making Tax Digital applies to you, review your existing accounting arrangements, select suitable software and prepare for the digital reporting requirements.
Whether you should already be complying or are preparing for April 2027 or April 2028, we can help you understand your obligations and the steps needed to meet them.
