MTD Income Threshold Explained: Does Your Income Qualify?
The single biggest question around Making Tax Digital for Income Tax is: does it apply to me? The answer depends on your qualifying income, and how that is calculated is not always obvious.
The Thresholds
| From | Threshold | Who must comply |
|---|---|---|
| April 2026 | Over £50,000 | Self-employed and landlords |
| April 2027 | Over £30,000 | Self-employed and landlords |
If your qualifying income is below these thresholds, MTD for Income Tax does not currently apply to you. You can continue with traditional Self Assessment.
What Counts as Qualifying Income?
Qualifying income is your gross income from:
- Self-employment — your total turnover before deducting expenses
- Property income — your total rental income before deducting expenses
It is the gross figure that matters, not your profit. This catches some people out. If your turnover is £55,000 but your profit after expenses is only £25,000, you still need to comply because the gross income exceeds £50,000.
Combined Income
If you have both self-employment and rental income, these are added together to determine whether you exceed the threshold.
For example: - Self-employment turnover: £35,000 - Rental income: £20,000 - Combined qualifying income: £55,000 — above the £50,000 threshold
Even though neither source alone exceeds £50,000, the combined total does, so you must comply with MTD.
What Does NOT Count
The following income sources do not count towards the MTD threshold:
- Employment income (PAYE)
- Dividends
- Savings interest
- Pension income
- Capital gains
- State benefits
These are excluded because MTD for Income Tax only applies to self-employment and property income. Your other income is still reported through Self Assessment alongside your MTD Final Declaration.
Which Tax Year Determines Eligibility?
Your obligation for a given tax year is based on your qualifying income from a previous tax year. For the first year of MTD (2026/27), HMRC looks at your 2024/25 income to determine whether you need to comply.
This means: - If your 2024/25 gross self-employment and property income exceeded £50,000, you must use MTD from April 2026 - If your income has since dropped below £50,000, you still need to comply for 2026/27
The threshold test looks backwards, not at your current year's expected income.
Multiple Self-Employments
If you have more than one self-employment (for example, a freelance consultancy and a separate sole trader business), the gross income from all self-employments is combined.
What If Your Income Fluctuates?
If your income is close to the threshold and varies year to year, you may find yourself mandated in some years but not others. HMRC will use the qualifying year's income to determine each year's obligation.
In practice, if your income is anywhere near £50,000, it may be worth using MTD software voluntarily. This avoids the disruption of switching in and out of MTD each year, and you will be ready when the threshold drops to £30,000 in April 2027.
How to Check
To determine whether you need to comply:
- Look at your 2024/25 Self Assessment return
- Find your gross self-employment turnover (box 15 on the short self-employment pages, or box 19 on the full pages)
- Add your gross property income if applicable
- If the total exceeds £50,000, you need MTD from April 2026
If you are unsure, check our guide on whether you need MTD software or consult your accountant.
Exemptions
Even if your income is above the threshold, you may be exempt from MTD in certain circumstances. See our full guide to MTD exemptions for details.