Making Tax Digital (MTD) for Income Tax begins from April 2026 for certain individuals. This guide explains whether it applies to you.
Step 1: Do You Have Self-Employment or Rental Income?
MTD applies only if you have:
• Self-employment income (sole trader), and/or
• Property rental income
If you only earn income from employment (PAYE), dividends, pensions, or savings – MTD does not apply to you at this stage.
Step 2: Does Your Gross Income Exceed the Threshold?
MTD is triggered based on gross turnover (before expenses) from self-employment and/or rental income.
From April 2026:
If your combined gross income from business and/or rental property exceeds £50,000, MTD will apply.
From April 2027:
If your combined gross income exceeds £30,000, MTD will apply.
Examples – You Do NOT Fall Into MTD If:
• £60,000 PAYE salary only
• £45,000 PAYE + £20,000 dividends
• £70,000 dividends only
• £55,000 PAYE + £8,000 side business income
In all of the above cases, MTD does not apply because there is no qualifying business or rental income above the threshold.
Examples – You DO Fall Into MTD If:
• £55,000 self-employment turnover
• £40,000 PAYE + £52,000 self-employment turnover
• £35,000 PAYE + £55,000 rental income
• £30,000 self-employment + £25,000 rental income (combined £55,000)
In these cases, MTD applies because qualifying income exceeds the threshold.
Important Points to Understand
• The test is based on gross income, not profit.
• PAYE income does not trigger MTD.
• Dividends do not trigger MTD.
• Limited companies are not currently included in MTD for Income Tax.
• If you are below the threshold, you will remain on annual Self Assessment for now.
If you are unsure whether MTD applies to you, we will review your position and confirm individually before any transition.
