Making Tax Digital (MTD) for Income Tax represents a major shift in how sole traders and landlords report their income. HMRC is rolling out this programme in stages over the coming years. Therefore, understanding when registration for Making Tax Digital applies to you is essential.
Who does MTD for Income Tax affect?
MTD for Income Tax applies to sole traders and landlords who complete self-assessment returns. Your liability to register depends on your level of “qualifying income.” This includes income from both self-employment and property combined.
Since April 2026, individuals with qualifying income over £50,000 must maintain digital records. They must also submit quarterly updates of trading or property income and expenses. Consequently, many higher-earning sole traders and landlords are already using the system.
When will further registration for Making Tax Digital be required?
The programme expands in clear stages over the next two years. Each stage lowers the qualifying income threshold:
- April 2027 – Registration for Making Tax Digital becomes compulsory for those with qualifying income over £30,000.
- April 2028 – The threshold reduces further to £20,000.
As a result, significantly more individuals will need to comply in the coming years. Additionally, these thresholds are based on income reported for the previous tax year. This means your most recently submitted self-assessment return triggers your obligation.
How the thresholds work in practice
The link between your previous year’s income and your registration date is important to understand. For example, the £30,000 threshold applies from 6 April 2027. However, it relates to your qualifying income for the 2025–26 tax year.
Therefore, if your reported income for that year exceeds £30,000, you must start using MTD from April 2027. Similarly, the £20,000 threshold in April 2028 links to your 2026–27 return. Planning ahead helps you identify your obligations early and prepare accordingly.
How HMRC determines your obligation
HMRC reviews your self-assessment return each year to assess your qualifying income. If you exceed the relevant threshold, they will normally write to confirm your start date. However, you should not rely solely on receiving a letter.
Even without notification, it remains your responsibility to check whether you must comply. Furthermore, you should prepare your systems and records well in advance. Late preparation could lead to missed deadlines and potential penalties.
What you should do now
If you believe you fall within the rules, take action promptly. Check your income against the current and upcoming thresholds carefully. In addition, consider whether your existing record-keeping meets digital requirements.
Registration for Making Tax Digital may also require you to adopt compatible software. Therefore, reviewing your options now gives you time to choose the right solution. Moreover, working with an adviser can help you transition smoothly and confidently.
Get in touch
If you are unsure whether registration for Making Tax Digital applies to you, our team can help. We can review your income, confirm your obligations, and guide you through the process step by step.
Contact us today to make sure you are fully prepared for Making Tax Digital.
