Whether Making Tax Digital for Income Tax applies to you comes down to one number — your qualifying income — and one date. Both are easy to get wrong, so this guide walks through them in order.
Step 1: work out your qualifying income
Qualifying income is your gross income from:
- self-employment (sole trade), plus
- property (UK and overseas), plus
- both together if you have both.
Two things trip people up.
It is turnover, not profit. You do not take expenses off first. A sole trader turning over £60,000 with £25,000 of costs has qualifying income of £60,000, not £35,000 — so they are in from April 2026, even though their taxable profit is well under the threshold.
Sources are added together. A landlord with £18,000 of rent and £15,000 from a side trade has qualifying income of £33,000, and is in from April 2027. Neither source on its own would have crossed the line.
Income that does not count towards the test includes employment income (PAYE), pensions, dividends, bank interest, and income from a partnership.
Step 2: find your start date
| Qualifying income | Making Tax Digital starts |
|---|---|
| Over £50,000 | 6 April 2026 |
| Over £30,000 | 6 April 2027 |
| Over £20,000 | 6 April 2028 |
| £20,000 or under | Not mandated — Self Assessment continues |
Source: GOV.UK: check if you must use Making Tax Digital for Income Tax. If you are near a threshold, work the figure through GOV.UK: work out your qualifying income rather than estimating from this page.
Step 3: check which tax year HMRC looks at
HMRC uses the tax return for the year two years before the start date. So:
- Your 2024/25 return decides whether you start in April 2026.
- Your 2025/26 return decides whether you start in April 2027.
- Your 2026/27 return decides whether you start in April 2028.
This is the detail most people miss, and it has a useful consequence: you generally know a year in advance. Once you have filed the 2025/26 return by 31 January 2027, you already know whether April 2027 applies to you — with two months’ notice rather than none.
HMRC writes to people it believes are in scope, but the obligation does not depend on the letter arriving. If your return shows qualifying income over the threshold, you are in.
What if you start trading part-way through a year?
If you are newly self-employed there is no prior-year return to test, so you are not brought in immediately. HMRC applies the test once you have filed a return covering a full year. In practice that means a new business gets at least a year of ordinary Self Assessment first.
If your income is annualised from a part-year — for example you started trading in January and earned £15,000 in three months — HMRC grosses that up to a full-year equivalent for the test.
Who is exempt
Some people are outside MTD for Income Tax altogether:
- Digitally excluded. If you cannot use digital tools because of age, disability, location (genuinely no reliable internet), or religious belief, you can apply to HMRC for an exemption. This is a formal application, not something you decide for yourself.
- Specific categories. Trustees, personal representatives of a deceased person, Lloyd’s underwriters and some others are excluded by the regulations.
- Partnerships. Partnership income is a separate regime and is not part of this rollout.
Being below the threshold is not an “exemption” — it just means MTD has not reached you yet. If your income later crosses the line, you come in.
If you are close to a threshold
Two practical points.
If you are hovering just under £30,000, treat yourself as being in from April 2027 and get your record-keeping straight anyway. Crossing the threshold is much easier than the administrative scramble of discovering you crossed it.
And if you are in a partnership as well as trading on your own, only the sole-trade and property income counts towards your personal test. The partnership itself is dealt with separately.
Where TaxSwipe fits
TaxSwipe works with Making Tax Digital for sole traders. You import bank statements, categorise each transaction, and it keeps the digital records and works out your quarterly figures.
We are not yet listed on HMRC’s find-software page, and we will say so here when that changes.
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