Making Tax Digital

Making Tax Digital for Income Tax: who it catches, and when

Making Tax Digital for Income Tax changes how sole traders and landlords keep their records and report them. It arrived for the largest in April 2026 and reaches a great many more in April 2027. Whether it applies to you is decided by one figure, and that figure is not the one most people reach for.

The thing most people get wrong

Qualifying income is turnover before any costs come off, not profit — so a trade turning over £70,000 and taking home £40,000 is tested on the £70,000.

What you need to know

The dates, and the figure that decides them

Three bands have been announced. Qualifying income of more than £50,000 joined on 6 April 2026. More than £30,000 joins on 6 April 2027 — HMRC estimates that band alone brings in around 1,077,000 more sole traders and landlords. More than £20,000 follows on 6 April 2028. These dates have been put back more than once, so confirm them against HMRC's own guidance rather than any software company's summary, this one included.

Turnover, not profit, and it is worth two years

Qualifying income is everything that came in from self-employment and property, added together, before you take off costs, allowances or tax. Somebody reading the profit figure off their tax return will often conclude they are two bands down and have another two years. A one-van electrician turning over £70,000 with £40,000 of profit is tested on the £70,000 and has been in scope since April 2026.

The test looks back, so it is already settled

Whether you are caught in April 2027 depends on your 2025-26 qualifying income, which is fixed by the time anybody reads this. It is not a running total of the year the duty begins, so there is nothing to manage down and no quieter year that gets you out of it. The only open question is whether you find out now or in the week it starts.

What changes, in practice

You keep digital records of income and expenses in compatible software rather than on paper or in a spreadsheet nobody else can read, send HMRC a summary each quarter, and finish the year through the MTD service instead of a plain Self Assessment return. For most trades the real work is not the filing — it is having the records in a form that can be filed at all, which is a habit rather than a deadline.

Questions, answered

Does Making Tax Digital apply to me?

It depends on your qualifying income from self-employment and property combined. More than £50,000 and it already applies, from April 2026. More than £30,000 joins in April 2027, more than £20,000 in April 2028. Below the lowest band nothing announced so far reaches you, though the thresholds have moved before.

I am under the threshold on profit but over it on turnover — which counts?

Turnover. The test is gross income before expenses, so the higher of the two figures is almost always the one that decides it. This single point is the commonest reason somebody believes they have longer than they do.

What if I have a job as well as self-employment?

Employment income is not qualifying income for this test — it is self-employment and property that count, added together. Someone with a full-time wage and a small weekend trade is measured on the trade and the property, not on the wage.

Can I be exempt?

Exemptions exist, including for people who are digitally excluded — for instance by age, disability, location or religious grounds. They are applied for rather than assumed, and being unenthusiastic about software is not one of them. HMRC's guidance sets out how to ask.

Work out your own figure

The arithmetic on this page is free to use without an account — the Making Tax Digital checker runs the same code the invoices in TaskMyJob do, so what it shows you is what the software would put on the paperwork.

This is general information about how these rules work, not advice about your own affairs. Contracts can say something different, and your accountant knows your situation and this page does not.

See it being done

Step-by-step guides with a short recording of each one, free to read without an account.

Connect your accounting package

Xero, QuickBooks or Sage, so invoices do not get typed twice.

Take a copy of everything

Download your customers, quotes, jobs, invoices and payments as spreadsheets — for your accountant, for your own records, or to take with you.

Raise and send an invoice

From a finished job, or from scratch when there was no job.

All the guides and videos →

Also worth a look

The other two questions trades ask about getting paid.

MTD quarterly updates

A quarterly update is a summary of income and expenses, not four extra tax returns. What goes in one, when it is due, and how the penalty points work.

CIS deductions

Why a £1,000 invoice is paid at £880, what the deduction is legally taken off, and why the total on the invoice does not change.

All advice →

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