This article was first published in 2022, and has been updated in March 2025 with the latest details. We will update again should any new information comes to light, so consider bookmarking this page.

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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 Making Tax Digital for Income Tax applies.

Making Tax Digital 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 to 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. What’s considered qualifying income for the MTD for Income Tax threshold?
6. Do savings interest, pensions etc. contribute to the threshold for MTD for Income Tax?
7. Are there separate MTD for Income Tax thresholds for income from self-employment and landlord rents?
8. 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)?
9. Do I have to be registered for the existing Self Assessment scheme for MTD for Income Tax to apply?
10. What happens if my income pushes me above the MTD for Income Tax threshold but then falls to below the threshold in later years?
11. Does capital gains tax, inheritance tax, VAT, or other kinds of tax affect the MTD for Income Tax threshold?
12. 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?
13. What’s the MTD for VAT threshold?
14. Do I have to be registered for MTD VAT in order to register for MTD for Income Tax?
15. 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?
16. 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?

The income thresholds for Making Tax Digital for Income Tax are:

• From April 2026, sole traders and landlords with an annual income of more than £50,000.
• From April 2027, the threshold will be lowered to those over £30,000.

It is anticipated that the threshold will be lowered further in the future to include those earning more than £20,000, but at the time of publication a date for this change has not been announced. However, the government has said this will be before the end of the current parliament.

To work out if the threshold is met you must combine all self-employment and landlord income. HMRC describes this broadly as all business and property income.

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

Unincorporated partnerships are currently excluded from Making Tax Digital for Income Tax, and there are no clear guidelines about when they may be introduced but it certainly will not be before April 2027.

Furthermore, partnerships cannot voluntarily sign-up for Making Tax Digital for Income Tax at the present time, either.

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

The period over which the threshold for Making Tax Digital for Income Tax will be calculated is the tax year.

For those starting Making Tax Digital 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.

For those starting in April 2027, the tax year used to calculate this will be 2025/26.

To help with this process moving forwards 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.

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

It is gross income that determines whether Making Tax Digital for Income Tax is a legal requirement. That is, all business and property income before any deductions or expenses.

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

Qualifying income is that which comes from self-employment and property income from UK sources (although foreign income from self-employment or property is included if domiciled in the UK).

Note that the income that needs to be considered might be from multiple self-employments and/or properties owned.

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

Only business or property income is considered as qualifying income for establishing if the threshold is met. All other sources are excluded.

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

No. Income from self-employment and landlord rents are combined together.

For example, if a self-employed plumber with £35,000 income from that trade, also receives £20,000 from rental income, then the total qualifying income of £55,000 pushes them over the £50,000 threshold

8. 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)?

Making Tax Digital for Income Tax is about income tax, so, therefore, applies just to an individual’s personal income.

In other words, the threshold applies to just the share of the rental income they receive.

For example, if rental income from an apartment block is £70,000 per annum, and a landlord’s share of that is £55,000, then that would push them above the threshold of £50,000.

As mentioned earlier, any self-employed income must be added to this. In other words, if they received £30,000 from a share of rental income, and self-employed income of £29,000, then the total income of £59,000 would take them over the threshold for starting in April 2026.

9. 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 Making Tax Digital for Income Tax, if the requirement to declare self-employed or landlord income is new (e.g. they have just started in a trade after being employed), they will have to use the older Self Assessment system until their income rises above £50,000. Then, as of the start of the next tax year, they will be legally required to register for Making Tax Digital for Income Tax.

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

10. 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 someone has signed-up to Making Tax Digital for Income Tax, either voluntarily or because their income has passed the threshold, they must continue using it.

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

If there are three consecutive years where they were within Making Tax Digital for Income Tax, but their qualifying income was less than £30,000 they can apply to be exempt.

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

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

12. 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 rental income plus income from self-employment is above £50,000/£30,000, then the income is above the threshold and you must register for Making Tax Digital for Income Tax.

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

13. What’s the MTD for VAT threshold?

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

You’ll need to register for VAT, and therefore Making Tax Digital for VAT, if your turnover is over £90,000.

14. 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.

15. 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?

They will first need to register for Self 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 they will need to register for Making Tax Digital for Income Tax.

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

No, they will be able to sign-up voluntarily for Making Tax Digital for Income Tax regardless of what their self employed or landlord income is, or where it comes from (although there are certain other limitations). If they anticipate their 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 they get a chance to become familiar with the software and processes before it becomes a legal requirement.

Conclusion

Although the thresholds relating to Making Tax Digital for Income Tax seem simple, care needs to be taken to fully understand the rules. Hopefully the questions answered above should be all that's needed for a full understanding. If not, consider contacting HMRC directly to discuss the matter.