Making Tax Digital for Income Tax has been delayed multiple times since it was first proposed, which has left a lot of sole traders and landlords unsure whether it's actually happening or genuinely applies to them. It is, and for many people, it already does.
The Threshold That Matters Right Now
If your qualifying income was over £50,000 in the 2024/25 tax year, MTD for Income Tax has applied to you since 6 April 2026. If your qualifying income was between £30,000 and £50,000 in 2025/26, you're brought in from April 2027. The threshold drops again to £20,000 from April 2028, bringing in another wave of sole traders and landlords.
What Counts Toward the Threshold
Qualifying income means your gross income from self-employment and property combined, before any expenses are deducted — not your profit. If you're both self-employed and a landlord, the two are added together. A sole trader earning £35,000 in trading income and £20,000 in rental income has £55,000 in combined qualifying income, over the £50,000 threshold, even though neither figure alone would trigger it.
Who's Still Exempt For Now
Below the relevant threshold for your phase, you're not yet affected — you continue filing under the existing Self Assessment system. Certain digitally excluded taxpayers, where HMRC accepts that using digital tools isn't reasonably practicable, can also apply for an exemption from the digital record-keeping and submission requirements specifically, though the underlying tax obligations remain.
The Practical Shift You're Actually Making
Once you're in scope, quarterly digital updates to HMRC replace the single annual Self Assessment return for your business and property income. These updates aren't tax calculations — they're running summaries of income and expenses submitted every three months, followed by a final declaration at the end of the tax year that calculates what you actually owe.
Software Is Not Optional
You'll need MTD-compatible software to keep digital records and submit your updates. A spreadsheet on its own doesn't satisfy the requirement unless it's linked to compatible bridging software that can submit directly to HMRC's system — this catches out more people than any other part of the transition.
Frequently Asked Questions
Do I need to register for MTD myself, or does HMRC do it automatically?
HMRC identifies likely-affected taxpayers from previous returns and writes to them, but the responsibility to comply sits with you — don't wait for a letter if your income is near or over the threshold.
What if my income fluctuates around the threshold year to year?
Your obligation is generally assessed based on a specific prior tax year's income for each phase — check current HMRC guidance for how continuing obligations and potential exit provisions apply to your specific situation.
Where to Go From Here
The Making Tax Digital Survival Blueprint includes a full decision tree to confirm exactly when MTD applies to your situation, software comparisons, and worked examples for sole traders, landlords, and mixed-income cases.
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This article is for educational and informational purposes only and does not constitute legal, accounting, or tax advice. HMRC rules are subject to change. Always verify current requirements with HMRC and seek professional advice where appropriate.