Taxpayers who are self-employed or receive rental income should check whether they will be subject to Making Tax Digital for Income Tax (MTD for IT) from next month. The new rules significantly change how affected individuals report their income to HMRC.
The first cohort subject to MTD for IT from 6 April 2026 are those whose qualifying income exceeded £50,000 in the 2024–25 tax year. This figure is important because HMRC is using the income declared on 2024–25 self-assessment tax returns to determine who must join MTD from April 2026. Anyone above this threshold will normally be required to keep digital records and submit information to HMRC using compatible software.
Qualifying income broadly refers to the total gross income from self-employment and rental income before expenses are deducted, also referred to as ‘turnover’. This can include income from multiple sources of self-employment and property income. However, all other types of income are not included when determining whether the threshold is met. For example, employment income taxed through PAYE, pension income, dividends and partnership income do not count towards the MTD income limit.
A second phase of the rollout will follow in April 2027, when MTD for Income Tax will extend to individuals with qualifying income between £30,000 and £50,000.
