Making Tax Digital for Income Tax: who it applies to and when
Making Tax Digital for Income Tax replaces the annual Self Assessment return with quarterly digital updates for sole traders and landlords above a gross income threshold. Here is exactly who is in scope, when, and the three details that trip people up.
Open the Making Tax Digital Checker calculatorMaking Tax Digital for Income Tax (MTD ITSA) changes how sole traders and landlords report income to HMRC. Instead of one Self Assessment return a year, you keep digital records and send four quarterly updates plus a year-end final declaration, using compatible software. It does not change how much tax you owe, only how and how often you report it.
Who it applies to
MTD ITSA applies to individuals: sole traders and people who receive UK (and, if you are UK tax resident, foreign) property income. It is assessed on your qualifying income, gross self-employment turnover plus gross property income, combined, before you deduct any expenses. It is not based on profit, and it is not based on either source alone, the two are added together.
Partnerships and Limited companies are out of scope regardless of income. If you trade through a limited company or a partnership, MTD ITSA does not apply to that entity, though it may still apply to you personally if you also have qualifying income outside it.
The phased thresholds
Mandation phases in over three tax years, each one assessed against a specific prior tax year's Self Assessment return, not the year mandation itself starts:
| Qualifying income threshold | Assessed against | Mandation starts |
|---|---|---|
| £50,000 | 2024/25 return | 2026-04-06 |
| £30,000 | 2025/26 return | 2027-04-06 |
| £20,000 | 2026/27 return | 2028-04-06 |
In practice: your 2024/25 Self Assessment return determines whether you must join from 2026-04-06. If you were under £50,000 that year but your income later crosses £30,000 in 2025/26, you join from 2027-04-06 instead. No further threshold reduction beyond 2028-04-06 has been announced as of the date below.
Three traps
1. Gross, not profit
Qualifying income is turnover and rent before expenses. A landlord with £45,000 in rent and £30,000 in mortgage interest and maintenance costs has a taxable profit of £15,000, but a qualifying income of £45,000, comfortably over the first threshold.
2. Combined across sources
Qualifying income from qualifying income includes both gross self-employment income (turnover, before expenses) and gross property income (rent, before expenses). A sole trader with £28,000 turnover and £25,000 gross property income has £53,000 combined, over the £50,000 threshold even though neither figure alone crosses it.
3. Assessed on a prior year
HMRC does not check the income you earn in the year mandation starts, it checks the return you already filed for an earlier year. This means you can know your mandation status well before the reporting obligation begins, which is exactly what the Making Tax Digital Checker is built to show.
What does not count
Qualifying income excludes employment income (PAYE), your share of profit from a partnership as an individual partner, dividends, including from your own company, State Pension, private pensions. Your share of profit from a partnership does not count toward your personal qualifying income, even though it is reported through your Self Assessment return.
Next steps
Enter your gross self-employment turnover and gross property income for the relevant tax year into the Making Tax Digital Checker to get your exact mandation date. If you are already mandated, the quarterly updates guide covers the deadlines themselves, and the penalty points guide covers what happens if you miss one.