Do I need to do Making Tax Digital in 2026?
Sole traders and landlords with gross income over £50,000 from self-employment and property combined became subject to Making Tax Digital for Income Tax (MTD for ITSA) from 6 April 2026. Below that line, the rules depend on which of two later phases you fall into, and on a test that looks backward rather than at your current earnings.
Three factors determine your position
Business type. MTD for ITSA applies to individuals with self-employment income, property income, or both. Limited companies are outside its scope. Partnerships will be brought in at a later date; HMRC has confirmed this but has not set a timeline.
Gross income, not profit. The threshold test uses turnover before expenses. A sole trader who invoiced £62,000 against £15,000 of costs has qualifying income of £62,000, not the £47,000 they actually kept. Self-employment and property income are added together for this test — a trade and a rental that individually sit under the threshold can combine to sit over it.
The tax year HMRC actually checks. The department does not assess current income. For the April 2026 start, HMRC used the 2024/25 return, filed by 31 January 2026, to determine who was in scope — meaning status was fixed more than a year before the obligation began.
The phased thresholds
| Qualifying income | Mandatory from | Based on tax year |
|---|---|---|
| Over £50,000 | 6 April 2026 | 2024/25 |
| Over £30,000 | 6 April 2027 | 2025/26 |
| Over £20,000 | 6 April 2028 | 2026/27 |
All three phases are now set out in regulations — The Income Tax (Digital Obligations) Regulations 2026 confirm the £20,000 threshold, which was previously only an announcement. Anyone under £20,000 falls outside every confirmed phase, though voluntary sign-up remains open at any time.
Where the threshold test misleads people
A retrospective test creates two traps. First, a strong year some time ago can pull someone into MTD even if current income has since dropped — the return HMRC checks may already be two years old by the time the obligation starts. Second, exit is not immediate: once mandated, a taxpayer can only leave once qualifying income has sat below the threshold for three consecutive tax years, not one quiet year. Anyone with both self-employment and rental income should also check the combined figure, not each stream in isolation — this is the most common reason people miscalculate their own status.
What changes once MTD applies
A taxpayer moves from filing one Self Assessment return a year to:
- Keeping digital records of income and expenses in MTD-compatible software — a spreadsheet only counts if bridging software links it to HMRC.
- Submitting four quarterly updates, due 7 August, 7 November, 7 February and 7 May.
- Submitting a Final Declaration by the following 31 January, which replaces the old Self Assessment return.
Each of these is covered in more detail in the linked articles below.
Check the figures directly
Our MTD Readiness Checker takes gross income figures and returns whether, and from when, MTD applies.
Related reading:
- MTD for ITSA deadlines 2026/27: the full calendar
- What counts as "qualifying income" for MTD — and what doesn't
- What happens if you miss an MTD deadline
- Am I exempt from MTD?
This is general guidance, not professional tax advice. Rules can change — check current guidance on GOV.UK or speak to an accountant.