You must join Making Tax Digital for Income Tax if your qualifying income, meaning your gross self employment and property income before expenses, is more than £50,000 for 2024 to 2025, £30,000 for 2025 to 2026 or £20,000 for 2026 to 2027. Each test looks at the tax return for the year two years before your start date, so the 2025 to 2026 return decides April 2027 and the 2026 to 2027 return decides April 2028.

What are the three thresholds and when does each one bite?

The thresholds are set by regulation 27 of the Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336), which replaced the 2021 digital requirements regulations from 1 April 2026. Regulation 27 defines the “qualifying amount” for each tax year:

Qualifying income measured in Qualifying amount You must start using MTD from
2024 to 2025 £50,000 6 April 2026
2025 to 2026 £30,000 6 April 2027
2026 to 2027 and later years £20,000 6 April 2028

The test is “more than”. Regulations 22 and 23 exempt you if your qualifying income is not more than the qualifying amount, so income of exactly £50,000 in 2024 to 2025 did not bring you in. HMRC’s guidance on who is exempt says the same for the lowest band: qualifying income of £20,000 or less means you are automatically exempt.

For the general rules on keeping digital records and sending updates, see our overview of Making Tax Digital for Income Tax.

Which tax return decides whether I have to join?

The rule looks back two years. Regulation 23 applies to any tax year after 2026 to 2027 (called year Y) and asks whether your qualifying income for year Y minus 2 was more than the qualifying amount for that earlier year. Regulation 22 does the same job for the first year, testing 2024 to 2025 income to decide whether MTD applied from 6 April 2026.

In practice that means:

  • your 2024 to 2025 return, due by 31 January 2026, decided whether you had to start in April 2026;
  • your 2025 to 2026 return, due by 31 January 2027, decides whether you must start on 6 April 2027;
  • your 2026 to 2027 return, due by 31 January 2028, decides whether you must start on 6 April 2028.

HMRC says it reviews each Self Assessment return, checks qualifying income and writes to anyone over the threshold to confirm they must start by the beginning of the following tax year. It also says that if you do not get a letter, it is still your responsibility to check and sign up. You still send an ordinary Self Assessment return for the year before you start, so someone joining on 6 April 2027 still files an ordinary return for 2026 to 2027 and keeps digital records and sends quarterly updates from 2027 to 2028 onwards.

What counts as qualifying income?

Qualifying income is your total income from self employment and property before expenses, which HMRC also calls turnover. Regulation 26 confirms that the figure is the amount on the return before deductions, unless the return does not ask for the gross figure. If you have more than one trade or more than one letting business, you add them together.

HMRC lists other income that does not count, including:

  • employment income taxed under PAYE;
  • your share of profit from a partnership as an individual partner;
  • dividends, including dividends from your own company;
  • the State Pension and private pensions;
  • transition profits from basis period reform;
  • qualifying care relief receipts and income from UK REITs or PAIFs.

Some edge cases count towards the figure. Your share of income from a jointly owned property counts, and HMRC will use your share after expenses if that is all you are told. If you use the cash basis and include VAT in your takings, the VAT is counted. Income you are entitled to from a bare trust counts, as does trading or property income from an interest in possession trust that is paid directly to you. Separate pages cover jointly owned property and partnerships.

How does the test work for a new or part year business?

Regulation 26(d) says that if qualifying income relates to a period other than 12 months, it is adjusted proportionately to the length of the period, or on a just and reasonable basis if a straight proportion would be unfair. HMRC’s guidance says it will annualise a sole trader’s figure if it has the information, so six months of trading is doubled. Landlords are told to annualise property income themselves.

Illustration only. Priya starts a trade on 6 October 2025 and takes £16,000 by 5 April 2026. Annualised over 12 months that is £32,000, which is more than the £30,000 qualifying amount for 2025 to 2026, so she should expect to use MTD from 6 April 2027 even though her actual takings were well under the threshold.

What if I amend a return or stop trading?

Amendments are treated differently depending on timing. HMRC says a change made before the start of a tax year that takes you over the threshold brings you in for that year, and one that takes you under it takes you out. After the tax year has started, an amendment that reduces your income below the threshold means you do not need to use MTD for that year, but an amendment that increases it is ignored for that year. Regulation 26(c) is the legal basis for ignoring the late increase.

If one source stops but another continues, the ceased income still counts. HMRC’s example is a landlord who sold their only property but remains self employed: the property income on the return still forms part of qualifying income. If all self employment and property income ceased before 6 April 2026, you are outside MTD, but HMRC asks you to tell it if your return does not yet show the cessation, otherwise it may sign you up based on the information it holds.

Once I am in, when can I leave?

Falling under the threshold for one year does not take you out. Regulation 23 only applies where no digital obligation applied in the previous year. Regulation 24 provides the exit: for tax years after 2028 to 2029, you are exempt if MTD applied for the three previous years and your qualifying income for each of those three years was not more than the qualifying amount.

HMRC’s own example is someone who joined in April 2026. They can opt out after the end of 2028 to 2029 if qualifying income is £20,000 or less on the 2026 to 2027 return, the 2027 to 2028 return and the fourth quarterly update for 2028 to 2029, which must be sent by 7 May 2029. They would then not need to use MTD for 2029 to 2030. The opt out option appears in the HMRC online services account only if you are eligible, and you can choose to carry on voluntarily instead. The quarterly update periods page explains the update deadlines.

Can I be exempt even though I am over the threshold?

Yes. HMRC grants some exemptions automatically, based on your 2024 to 2025 return, and others on application. Examples from the guidance:

  • no National Insurance number before the start of the tax year;
  • a power of attorney or a deputy acting because you cannot provide information to HMRC;
  • a claim to averaging relief, qualifying care relief, trust or estate income on the SA107, or the residence pages SA109, which give an exemption lasting until April 2027 at the earliest;
  • being digitally excluded because of age, health, disability, religious belief or location, which needs an application.

HMRC states it will not accept a digital exclusion application based only on having filed on paper before, being unfamiliar with software, having few records or the time or cost involved. Trusts filing an SA900 and personal representatives are also automatically exempt in that capacity.

What mistakes come up most often?

  • Using profit instead of turnover. A landlord with £35,000 of rent and £20,000 of costs has qualifying income of £35,000, not £15,000.
  • Looking at the wrong year. The April 2027 decision rests on 2025 to 2026 income, not on what you expect to earn in 2027 to 2028.
  • Counting the wrong income. Salary, dividends and partnership profit shares do not count, but every sole trade and every property you let, in the UK or abroad if you are UK resident, are added together.
  • Waiting for a letter. HMRC is clear that the duty to check and sign up sits with you.
  • Assuming a single bad year lets you leave. Exit needs three consecutive years at or under the threshold.
  • Treating exactly £50,000, £30,000 or £20,000 as over the line. The test is more than the qualifying amount.

For people required to join from 6 April 2026, HMRC says it will not apply penalty points for late quarterly updates in the first tax year, 2026 to 2027, although penalties still apply for late returns and late payment. See our guide to Self Assessment deadlines and penalties for the wider picture.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.