Am I affected, and when?

MTD is being introduced in waves based on how much sole trade or property income you have. You only come into MTD if you're above the threshold and your income is of the right type.

The short answer

You come into MTD from the first day of a tax year (6 April) if, two tax years earlier, you had more than the threshold in qualifying income.

The government has said the £20,000 threshold is its current stopping point, though that could be reviewed in future Budgets.

What's "qualifying income"?

Qualifying income is your gross income (before expenses) from:

• Self-employment as a sole trader, and/or
• UK or foreign property rental income.

You add the two together to test the threshold. Someone with £35,000 from self-employment and £20,000 from rentals has £55,000 of qualifying income and would come into MTD from April 2026.

What's not qualifying income

These income types don't count towards the MTD threshold:

• Employment income (salary from a job, PAYE).
• Pensions (state or private).
• Dividends, interest, and other savings/investment income.
• Partnership income. Your share of profits from a trading partnership doesn't count as qualifying income.
• Income from a limited company you own (that's the company's tax return, not yours).

Also excluded (less common):

• Trustees of charitable trusts and exempt unauthorised unit trusts.
• Lloyd's underwriting businesses.
• People whose only property income is from REITs or property income distributions from open-ended investment companies.

If all your income sits in one of those excluded types, you're outside MTD entirely for now.

Furnished holiday lets

Quick note if you run a furnished holiday let (FHL): the separate FHL tax regime was abolished from 6 April 2025. FHL income is now just property income for all tax purposes, including the MTD qualifying income test. If you've previously had your accountant treat FHL differently, that ended before MTD started.

Examples

Amir is a self-employed plumber. In 2024-25 his turnover was £62,000. He has no other sole trade or property income. → Over the £50k threshold. Amir is in MTD from 6 April 2026.

Beth runs a vintage-clothing business on the side alongside a full-time salaried job. Her 2024-25 sole-trade turnover was £18,000. Her salary was £48,000. → Her qualifying income is £18,000 (employment doesn't count). Under the £50k threshold in 2026, under £30k in 2027, under £20k in 2028. Beth is not currently in MTD. She may come in later if her business grows or if HMRC lowers the threshold.

Chinwe is a landlord with three buy-to-lets. 2024-25 gross rent across the three was £42,000. No sole-trade income. → Under £50k. Not in MTD from April 2026. She tests again against £30k on her 2025-26 return and will likely be in from April 2027.

Dev has a sole-trade consultancy (£22,000 turnover) and a single rental property (£14,000 gross rent). Total qualifying income: £36,000. → Over £30k but under £50k. Dev is in MTD from 6 April 2027, based on his 2025-26 return.

Eliza is a partner in a four-person architecture partnership with a £35,000 share of profits. She also rents out a flat (£9,000 gross). → Partnership profit doesn't count. Her qualifying income is £9,000. Not in MTD on any of the current thresholds.

When HMRC will tell you

HMRC writes to people they believe are over the threshold. You'll typically hear from them in the autumn before your start date. But you don't have to wait for a letter: if you've just filed a Self Assessment that shows you're over the threshold, you can sign up voluntarily from April 2025 onwards. See Signing up with HMRC.

What if I'm not sure?

Two quick checks:

1. Look at your most recent Self Assessment. Add together your turnover box for self-employment (before expenses) and your gross rental income box for property (before expenses). Compare the total to the thresholds above.
2. If you're within £5–10k of a threshold in either direction, have a conversation with your accountant or use GOV.UK's eligibility tool.

What if I'm a borderline case, do I have to join voluntarily?

No. MTD is only mandatory once you're over the relevant threshold for the relevant year. You can join voluntarily if you want to get comfortable with the system early, but if you do, some penalty rules start to bite differently, see Penalties.

What if my income drops below the threshold later?

If you've been mandated into MTD, you generally stay in MTD even if your income drops in a later year. If your circumstances change significantly (for example, you wind down the business), speak to HMRC; the rules allow you to leave MTD in some cases, but it's not automatic.

Summary

You're in MTD if:

• You're a sole trader and/or landlord, and
• Your qualifying income (gross, combined) is over the threshold for the year you're being tested against, and
• You aren't in one of the excluded categories.

Otherwise, for now, you're not.

Sources

• Find out if and when you need to use Making Tax Digital for Income Tax (GOV.UK)
• Work out your qualifying income (GOV.UK)
• Reduction of the mandation threshold from £30,000 to £20,000 from April 2028 (GOV.UK)
• Making Tax Digital for Income Tax Self Assessment for sole traders and landlords (GOV.UK)