If your qualifying income from self-employment is over £30,000, you may need to use Making Tax Digital for Income Tax from 6 April 2027. The figure that matters is the qualifying income reported on your 2025/26 Self Assessment tax return — in most cases, your gross income before expenses.
Independent guide from MTD Together • Not HMRC • Always check GOV.UK for the definitive rules
This is the question most sole traders ask first. The answer is: it's based on your qualifying income before expenses — broadly your turnover, not your taxable profit.
Counts towards the threshold
Gross income from self-employment and/or property — the amount before any expenses are deducted. If you have more than one qualifying source, the amounts may need to be added together.
Does not count
Employment income taxed through PAYE, most pension income, and other non-qualifying income. These don't push you over the MTD threshold.
Example — not tax advice
Priya is a freelance graphic designer. In the 2025/26 tax year her business turnover is £42,000 and her allowable expenses are £12,000. Her taxable profit is £30,000, but her qualifying income for MTD is £42,000 — over the £30,000 threshold. That means Making Tax Digital for Income Tax applies to her from 6 April 2027.
For the full definition of qualifying income and any exceptions, see the official Making Tax Digital for Income Tax guidance on GOV.UK.
Follow these three steps to work out your basic position. If your circumstances are complicated, check the official guidance or contact HMRC.
Look at your gross income from self-employment and/or property before expenses — the amount on your 2025/26 Self Assessment tax return, not your taxable profit.
If your qualifying income was over £30,000 in the 2025/26 tax year, Making Tax Digital for Income Tax starts for you on 6 April 2027.
If your income is close to £30,000, you have several income sources, or your circumstances are unusual, check the official HMRC guidance or contact HMRC to confirm your start date.
Quick check: If you're a sole trader and your qualifying income was over £30,000 on your 2025/26 Self Assessment tax return, the April 2027 rules likely apply. For the full picture — including landlords, partnerships, trusts and exceptions — read the official HMRC guidance.
Making Tax Digital changes how you keep and send records. It does not mean filing four full tax returns a year.
You'll record your business income and expenses digitally. That doesn't mean scanning every receipt — it means your records live in compatible software rather than on paper or in a basic spreadsheet.
Every three months you'll send HMRC a short summary of your income and expenses through your compatible software. These are updates, not four extra tax returns.
After the tax year ends, you'll complete and submit the required tax return information through your software by 31 January, just as you do now — but it must flow from your digital records.
Important: Quarterly updates are short summaries of your income and expenses, not additional tax returns. You still complete and submit your tax return information after the tax year ends, using the same compatible software.
A spreadsheet on its own is not MTD-compatible software. But that doesn't mean you have to abandon it.
HMRC allows spreadsheets to be used alongside bridging software — a tool that connects your spreadsheet to HMRC and submits the required information digitally. So if you're comfortable keeping records in Excel or Google Sheets, you may be able to keep that workflow and add a compliant bridge.
Alternatively, many record-keeping or accounting products handle the whole process in one place. We'll be publishing a dedicated spreadsheet guide soon — for now, the HMRC compatible software finder lists products that support spreadsheets.
The first thing to check is whether your current product supports Making Tax Digital for Income Tax. Many popular providers are adding MTD functionality, but not every plan or version includes it.
Look for confirmation from your software provider that their product is compatible with HMRC's MTD for Income Tax requirements. If it isn't, you'll need to switch or add a bridging solution before your start date.
Find MTD-compatible software on GOV.UKThere's no need to panic — April 2027 is a while away. But preparing ahead of the deadline gives you time to choose the right software, organise your digital records and understand the process without last-minute pressure.
MTD Together can help you understand what you need, choose an appropriate setup and get your software working for you. Book a free 15-minute readiness call, and if you'd like hands-on help afterwards, our £99 one-to-one Digital Setup Session gets your chosen software set up with you.
Independent support service • Not HMRC • No obligation
It's turnover — or more precisely, your qualifying income before expenses. HMRC looks at your gross income from self-employment and/or property, not the profit left after costs. So someone with £35,000 of turnover and £10,000 of expenses would still be over the £30,000 threshold.
Generally, no. Income from employment taxed through PAYE does not count as qualifying income for MTD for Income Tax. The threshold is based on income from self-employment and property. Having a PAYE job doesn't exempt you, but your salary isn't added in.
They may need to be added together. If you have qualifying income from both self-employment and property, HMRC usually combines them when deciding whether you meet the threshold. So £20,000 from self-employment plus £15,000 from rent could take you over £30,000.
The threshold is over £30,000, not £30,000 or more. If your qualifying income is exactly £30,000, you would not be caught by the £30,000 threshold on that figure alone. Always double-check your own calculations against the latest HMRC guidance.
Once you're in Making Tax Digital, a later drop in income doesn't automatically remove you. There are rules about when you can stop using MTD, and they depend on your circumstances. If your income falls, check the current GOV.UK guidance or ask HMRC.
No. There's no legal requirement to use an accountant. Many sole traders keep their own digital records and submit their own quarterly updates and tax return using compatible software. You can use an accountant or agent if you prefer, especially for complex affairs, but it's optional. MTD Together helps with the digital setup; we don't give tax advice.
For sole traders whose qualifying income is over £30,000 in the 2025/26 tax year, Making Tax Digital for Income Tax starts on 6 April 2027.
These answers are general guidance, not tax advice. For the definitive rules, always refer to the official Making Tax Digital for Income Tax guidance on GOV.UK.