Making Tax Digital for Income Tax (MTD for IT) thresholds

If you’re self-employed or a landlord, Making Tax Digital for Income Tax requires you to keep digital records of all your income and expenses and send quarterly updates to HMRC. However, not everyone needs to do this, depending on how much gross income you earn – and the threshold you meet.

In this guide, we’ll explore what exactly these MTD thresholds are, who they apply to, and what they mean for you as a self-employed business owner.

MTD thresholds – In summary

• If your total qualifying income meets the Making Tax Digital threshold, MTD becomes mandatory.

• As of 6^th April 2026, the MTD threshold is £50,000, which will decrease to £30,000 from 6^th April 2027, and £20,000 from 6^th April 2028.

• If your total income falls under the threshold, you can still opt in voluntarily for Making tax Digital, although following MTD can have benefits in the long run.

What are MTD for IT thresholds?

Making Tax Digital for Income Tax thresholds are the qualifying income you need to reach to trigger mandatory MTD compliance. This requires you to keep digital records of all your income and expenses and send quarterly updates to HMRC using MTD-compliant software.

MTD thresholds are being introduced in stages based on levels of income. For example, the compliance threshold will start at £50,000 from 6^th April 2026, reducing to £30,000 from 6^th April 2027, and then £20,000 from 6^th April 2028.

As the years progress, the mandatory MTD compliance threshold will reduce, meaning more sole traders and landlords will have to ensure they are MTD-compliant.

Learn more about our HMRC-recognised MTD software

When do Making Tax Digital thresholds become effective?

Making Tax Digital thresholds are being introduced in three phases, with the qualifying income levels decreasing each year between April 2026 and April 2028. As the MTD limits decrease, it’s important to check whether or not you fall into the income brackets. This ensures you remain compliant and avoid penalties.

MTD thresholds become effective from:

• 6^th April 2026 – mandatory for sole traders and landlords with a gross income over £50,000

• 6^th April 2027 – mandatory for sole traders and landlords with a gross income over £30,000

• 6^th April 2028 – mandatory for sole traders and landlords with an income over £20,000

It’s worth noting that Partnership business will also need to start adhering to Making Tax Digital in the future. However, the government has yet to set any thresholds or deadlines for this.

Who do MTD thresholds apply to?

The Making Tax Digital thresholds apply to all self-employed business owners/sole traders and landlords who are registered for Self Assessment, and who have a qualifying income above MTD limit.

For example, as per the MTD thresholds set between 6^th April 2026 and 6^th April 2027, you will need to comply with Making Tax Digital if you earn over £50,000 per year. From 6^th April 2027, this decreases to £30,000 per year.

What counts as qualifying income for Making Tax Digital?

Qualifying income for Making Tax Digital (MTD) for Income Tax is the gross turnover you earn (before expenses) from self-employment and property rentals. Qualifying income is the combined turnover that exceeds the MTD thresholds, starting at over £50,000 from 6^th April 2026.

Some important things to keep in mind regarding your qualifying income are:

• The thresholds refer to gross income, not profit. You’ll need to consider whether your total turnover reaches the limit, regardless of your net profit.

• Incomes are combined. For example, if you earn money from both self-employment and property, these incomes will be combined to determine what threshold you sit in.

• Qualification is based on the previous tax year. Whether or not you are required to comply with MTD is based on whether your income for the previous tax year meets the threshold.

• Not all ‘income’ counts. Your combined qualifying turnover should exclude employment (PAYE), dividends and pension income.

What if your income tax drops below the threshold?

If your total income drops below the Making Tax Digital threshold, you’ll need to continue following MTD rules until your turnover stays below the limit for three years in a row. After this, you can then opt out of MTD. However, you can also choose to stay in it and continue with Making Tax Digital indefinitely.

MTD for VAT thresholds

Unlike Making Tax Digital for Income Tax for sole traders and landlords, which is only required when you meet the required threshold, MTD is mandatory for all VAT-registered businesses, regardless of taxable turnover. This was effective as of April 2022.

For VAT-registered businesses, there is no minimum MTD turnover threshold you must meet before you need to start following Making Tax Digital rules. However much your business earns, you must use MTD-compliant digital software to send quarterly updates to HMRC.

Preparing for MTD for IT regardless of threshold

You don’t have to meet the MTD threshold to start following Making Tax Digital rules; you can voluntarily sign up for it. However much your turnover, it’s a good idea to understand and prepare for MTD, so you know you’re ready should the time come.

At QuickBooks, we offer HMRC-recognised MTD software for both Income Tax and VAT. Whether you’re an experienced business owner or new to Making Tax Digital, we provide all the tools you need to remain MTD-compliant. 

Making Tax Digital thresholds FAQs

Can I sign up for MTD if I have qualifying income under the threshold?

Yes, you can volunteer to sign up for Making Tax Digital, even if your total income falls under the current threshold. Making Tax Digital just requires you to use HMRC-recognised software to keep records of your income and expenses and send quarterly updates digitally. You may find that voluntarily following MTD rules helps you to reduce errors and save time. 

What time period is Making Tax Digital for?

Making Tax Digital for Income Tax applies to your tax year, which runs from April 6th to April 5^th the following year. Whether you’re required to follow MTD rules is based on your total income in the previous tax year. Eligible self-employed individuals and landlords must keep digital records and submit quarterly updates to HMRC throughout their tax year.

Who is exempt from Making Tax Digital?

Sole traders and landlords with gross income below the MTD thresholds (£50,000 until April 2027, then £30,000) are currently exempt from mandatory MTD for Income Tax. General partnerships are also exempt for now. Plus, those who are genuinely digitally excluded due to age, disability, or remoteness may apply for an exemption from HMRC.

Learn more about Making Tax Digital exemptions.

The information on this website is provided free of charge and is intended to be helpful to a wide range of businesses. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. Any reliance you place on information found on this site or linked to on other websites will be at your own risk.

This information is intended to outline our general product direction, but represents no obligation and should not be relied on in making a purchasing decision. Additional terms, conditions and fees may apply with certain features and functionality. Eligibility criteria may apply. Product offers, features, functionality are subject to change without notice.