MTD for Income Tax Self Assessment: What are the thresholds?

Individuals need to observe the Making Tax Digital for Income Tax rules if their income crosses a threshold. In this article we discuss what that is, and the other conditions that decide whether MTD for Income Tax applies.

Keir Thomas-Bryant
Keir Thomas-Bryant

This article was first published in 2022, and has been updated with the latest details.

Making Tax Digital (MTD) for Income Tax is due to become mandatory for most kinds of sole traders and landlords as of April 2026.

Whether you'll be legally required sign up when 2026 comes around will depend on whether your income from a self-employed trade or property rental crosses a certain threshold.

Read on to learn more. Here's what we talk about:

  1. What is the threshold for MTD for Income Tax?
  2. Does MTD for Income Tax affect partnerships as well as sole traders and landlords?
  3. Over what period is the threshold for MTD for Income Tax calculated?
  4. Is it my turnover or income that counts for the MTD for Income Tax threshold?
  5. Is the threshold for MTD for Income Tax before or after tax?
  6. What’s considered qualifying income for the MTD for Income Tax threshold?
  7. Do savings interest, pensions etc. contribute to the threshold for MTD for Income Tax?
  8. Are there separate MTD for Income Tax thresholds for income from self-employment and landlord rents?
  9. Does the MTD for Income Tax threshold apply to all rental income from a property or just the share I receive (e.g. shared property ownership)?
  10. Do I have to be registered for the existing Self Assessment scheme for MTD for Income Tax to apply?
  11. What happens if my income pushes me above the MTD for Income Tax threshold but then falls to below the threshold in later years?
  12. Does capital gains tax, inheritance tax, VAT, or other kinds of tax affect the MTD for Income Tax threshold?
  13. I own only one rental property that I inherited, which is to say, I’m not a professional landlord. Does MTD for Income Tax affect me?
  14. What’s the MTD for VAT threshold?
  15. Do I have to be registered for MTD VAT in order to register for MTD for Income Tax?
  16. I’m new to self-employment and/or rental income from property. I know my income will be over £50,000 (as of April 2026, or £30,000 as of April 2027). Do I have to register for MTD for Income Tax?
  17. Do I have to earn above the MTD for Income Tax threshold to register for MTD for Income Tax?

1. What is the threshold for MTD for Income Tax?

To be required to sign-up for MTD for Income Tax in April 2026, HMRC says the qualifying annual income for the tax year for sole traders or landlords via must be more than £50,000–which is to say, it must be from £50,001 upwards. These individuals must already be using Self Assessment.

From April 2027, this threshold will be lowered to £30,000, so those earning £30,001 and above (and who are registered for Self Assessment) will need to sign-up for MTD for Income Tax from that date.

It’s anticipated that the threshold will be lowered further at a future date, meaning those and who are registered for Self Assessment and earning less than £30,000 might be required to sign-up to MTD for Income Tax. But it’s not yet been announced when this will happen, or what the threshold will be at that point.

2. Does MTD for Income Tax affect partnerships as well as sole traders and landlords?

It was planned that MTD for Income Tax would become mandatory for general partnerships a year after the original launch date of April 2024, with the same basic rules applying as for sole traders.

However, this requirement was discarded by the government in late 2022.

It’s now unclear when MTD for Income Tax will become a legal requirement for partnerships, and what any threshold will be, but it will almost certainly not be mandated before April 2027.

Notably, partnerships can't voluntarily sign-up for MTD for Income Tax at the present time, either, so are effectively excluded from MTD for Income Tax for the time being.

3. Over what period is the threshold for MTD for Income Tax calculated?

All businesses have a basis period, which is the period for which tax is calculated and paid. This typically matches the accounting period of the business, but it isn't always the case.

However, inspired by the MTD for Income Tax introduction, the rules have changed so that all unincorporated businesses—such as sole traders—must use the tax year (6 April – 5 April, or 1 April—31 March as their basis period. This is true even if their accounting period uses different dates, and several have had to go through a period of adjustment known as basic period reform.

Landlords already use the tax year as their basis period.

Therefore, the period over which the threshold for MTD for Income Tax will be calculated is the tax year.

For those starting MTD for Income Tax on the start date of April 2026, the tax year used to calculate this will be 2024/25, because income for 2025/26 will not yet have been fully declared.

4. Is it turnover or income that counts for the MTD for Income Tax threshold?

It’s your gross income that determines whether MTD for Income Tax is a legal requirement for you.

Turnover refers to all money received by a business, so could include money received for things like sales, something not counted for the sake of the MTD for Income Tax threshold.

5. Is the threshold for MTD for Income Tax before or after tax?

It’s your gross income that matters, which is to say, it’s the pre-tax income you have before deducting expenses.

6. What’s considered qualifying income for the MTD for Income Tax threshold?

Qualifying income for MTD for Income Tax is that which comes from self-employment and property income from UK sources (although foreign income from self-employment or property is included if you’re domiciled in the UK).

Note that the income you need to consider might be from multiple self-employments you undertake and/or properties that you have.

7. Do savings interest, pensions etc. contribute to the threshold for MTD for Income Tax?

No. If you fall within the scope of MTD for Income Tax (or sign-up voluntarily), then you’ll also need to use your MTD software (or HMRC online services account) to report other kinds of personal income, such as savings interest. But this won’t count as qualifying income in order to decide the threshold for whether MTD for Income Tax should apply.

8. Are there separate MTD for Income Tax thresholds for income from self-employment and landlord rents?

No. For the sake of the MTD for Income Tax threshold, your income from self-employment and landlord rents are combined together.

For example, if you’re a self-employed plumber with £35,000 income from that trade, and you also receive £20,000 from rental income, then the total qualifying income of £55,000 pushes you over the £50,000 threshold—and MTD for Income Tax must apply as of April 2026.

9. Does the MTD for Income Tax threshold apply to all rental income from a property or just the share I receive (e.g. shared property ownership)?

MTD for Income Tax is about income tax, so, therefore, applies just to your personal income.

In other words, the MTD for Income Tax threshold applies to just the share of the rental income you receive.

For example, if rental income from an apartment block is £70,000 per annum, and your share of that is £55,000, then that would push you above the MTD for Income Tax threshold of £50,000 as of April 2026, and therefore MTD for Income Tax will apply to you.

As mentioned earlier, any self-employed income must be added to this. In other words, if you receive £30,000 from a share of rental income, and your self-employed income is £29,000, then the total income of £59,000 means that MTD for Income Tax will apply to you as of April 2026.

10. Do I have to be registered for the existing Self Assessment scheme for MTD for Income Tax to apply?

Yes. As of the start date for MTD for Income Tax, if your requirement to declare self-employed or landlord income is new (e.g. you’ve just started in a trade after being employed), you will have to use the older Self Assessment system until your income rises above £50,000. Then, as of the start of the next tax year, you’ll be legally required to register for MTD for Income Tax.

This is only for 2026/27, however, and as of April 2027 if your income has been above £30,000 then you will need to sign-up to MTD for Income Tax.

11. What happens if my income pushes me above the MTD for Income Tax threshold but then falls to below the threshold in later years?

Once you sign-up to MTD for Income Tax—either voluntarily or because your income has passed the threshold—you must continue using it.

This is the case even if your income drops to £50,000 or below (or £30,000 or below as of April 2027).

The only time you would stop using MTD for Income Tax for self-employment or landlord rental income is if you stopped receiving income of that type, and therefore no longer needed to submit an income tax return (for example, if you returned to full-time salaried employment after being self-employed, or sold the property).

At that point, you can deregister for Self Assessment and, therefore, the requirement to use MTD for Income Tax.

12. Does capital gains tax, inheritance tax, VAT, or other kinds of tax affect the MTD for Income Tax threshold?

No. The threshold for MTD for Income Tax is calculated based only on gross self-employed trade income and rental income from properties.

13. I own only one rental property that I inherited, which is to say, I’m not a professional landlord. Does MTD for Income Tax affect me?

If either the rental income is over £50,000 as of April 2026 (or £30,000 as of April 2027), or your rental income plus your income from self-employment is above £50,000/£30,000, then your income is above the threshold and you must register for MTD for Income Tax.

The nature of how the property came into your possession, or the work you do as a landlord, has no bearing on this.

14. What’s the MTD for VAT threshold?

MTD for VAT is now mandatory for all businesses that are registered for VAT, so there is no longer a threshold as there was when MTD for VAT was first launched back in 2019.

You’ll need to register for VAT—and therefore MTD for VAT—if your turnover is over £85,000.

15. Do I have to be registered for MTD for VAT in order to register for MTD for Income Tax?

No. The two schemes are entirely independent of each other, even if their requirements are similar.

16. I’m new to self-employment and/or rental income from property. I know my income will be over £50,000 (as of April 2026, or £30,000 as of April 2027). Do I have to register for MTD for Income Tax?

You will first need to register forSelf Assessment, and use the traditional submission method of completing an online return. Once you have submitted a tax return that includes self-employed and/or rental income in excess of the £50,000/£30,000 threshold, then you will need to register for MTD for Income Tax.

17. Do I have to earn above the MTD for Income Tax threshold to register for MTD for Income Tax?

No, you will be able to sign-up voluntarily for MTD for Income Tax regardless of what your self employed or landlord income is, or where it comes from (although there are certain other limitations). If you anticipate your income rising above £50,000 (as of April 2026), or £30,000 (as of April 2027), then signing up ahead of time makes a lot of sense because you get a chance to sort out any issues with your processes ahead of MTD for Income Tax becoming a legal requirement, at which point penalties might apply if you get something wrong.

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