A client joins Making Tax Digital for Income Tax at the start of the tax year after HMRC sees qualifying income above the threshold on a filed return: over £50,000 for 2024 to 2025 means 6 April 2026, over £30,000 for 2025 to 2026 means 6 April 2027, and over £20,000 for 2026 to 2027 means 6 April 2028. Agents should run that test across the whole client list each time a year’s returns are filed, strip out the exempt, and sign each cohort up well before its start date.
Which return decides each client’s start date?
HMRC’s guidance on when to use Making Tax Digital for Income Tax applies three tests, each based on a different year’s return:
| Return checked | Qualifying income over | Must use MTD from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
HMRC reviews each Self Assessment return and writes to taxpayers whose qualifying income is over the threshold, confirming they must start by the next tax year. It also says that a client who gets no letter is still responsible for checking. From September 2026 HMRC began signing up people who needed to use the service for 2026 to 2027 but had not signed up, using only the information it already held. The rules behind the figures are in our guide to MTD thresholds.
How should a firm work out qualifying income from its own records?
Qualifying income is total income from self employment and property before expenses, in other words turnover and gross rents, taken from the return. HMRC’s example is £25,000 of rent plus £27,000 of self employment income, giving £52,000. A firm can usually produce this from its tax software by adding the turnover box on each self employment page to gross rents on the property pages, but several items need manual care:
- Employment income, an individual partner’s share of partnership profit, dividends and pensions do not count.
- For jointly owned property, only the client’s share of the income counts.
- Transition profits from basis period reform are excluded.
- A cash basis client who is VAT registered may have included VAT in income, and if so it counts.
- HMRC annualises a sole trader’s income for a short first period where it has the information, but landlords must annualise their own property income.
- A client who was not UK resident counts only UK property income and self employment income declared on the UK return.
Our guide to qualifying income covers the less common items, such as trusts and carried interest.
Which clients can be taken off the list?
HMRC gives some exemptions automatically. Clients with qualifying income of £20,000 or less are exempt, as is anyone without a National Insurance number before the start of the tax year. Trusts filing an SA900, non resident companies filing an SA700 and personal representatives are exempt in those roles, though their own personal income may still bring them in. A 2024 to 2025 return showing Lloyd’s underwriting on the SA103L, or a power of attorney or deputy because the client cannot deal with HMRC, also gives an automatic exemption.
Some automatic exemptions last only until April 2027. A client whose 2024 to 2025 return claimed averaging relief as an individual, claimed qualifying care relief, or included the SA107 trusts page or the SA109 residence page does not need to join for 2026 to 2027, but will need to join from 2027 to 2028 if qualifying income for 2025 to 2026 is above £30,000. Ministers of religion filing the SA102M and those claiming Married Couple’s Allowance or Blind Person’s Allowance are exempt for now, with a timeline still to be set. Partnerships do not yet need to join. A client who is digitally excluded must apply. See MTD exemptions.
How do amendments and ceased businesses change the answer?
An amendment made before the tax year starts counts in either direction. After the year starts, an amendment that takes income below the threshold removes the obligation for that year, but one that takes it above is ignored for that year. A ceased source still counts if the client has another continuing self employment or property source. If every source ceased before 6 April 2026 the client does not need to join, but HMRC will sign them up on the information it holds unless told. Once in, a client whose qualifying income stays below the threshold for three tax years in a row can opt out.
How should the rollout be planned?
Treat each threshold as a separate cohort with its own timetable.
- April 2026 cohort. These clients should already be live. Check whether each was signed up by the firm, by the client or by HMRC, confirm the income sources HMRC holds, and note that HMRC is not applying penalty points for late quarterly updates in 2026 to 2027. If you think HMRC has signed up a client who does not need to join, HMRC says agents should use the agent dedicated line.
- April 2027 cohort. Run the £30,000 test on each 2025 to 2026 return as it is finalised, rather than waiting for the 31 January 2027 deadline. Flag borderline clients early so that late information does not push them over after the list is drawn up.
- April 2028 cohort. Use 2025 to 2026 figures to identify clients between £20,000 and £30,000 now, because their 2026 to 2027 income will decide their start.
Before any client can be signed up, HMRC requires them to be registered for Self Assessment and to have filed a return in the last two years, and the firm needs an agent services account and the client’s authorisation for Making Tax Digital for Income Tax. Existing Self Assessment authorisations can be brought across, but each client must still be signed up individually. A client can volunteer for the current or next tax year. Volunteers are not penalised for late quarterly updates, though a late return still earns a point, with a £200 penalty at 2 points. The steps are in signing up clients for MTD, and the workload is priced in pricing MTD quarterly work.
How might a client list sort out?
Illustration only, based on 2025 to 2026 returns:
| Client | Relevant income | Result |
|---|---|---|
| A, sole trader | Turnover £34,000 | Joins April 2027 |
| B, landlord | Half share of £50,000 joint rents | £25,000, not yet; watch 2026 to 2027 |
| C, employee with rental | Salary £80,000, rents £12,000 | £12,000, exempt at £20,000 or less |
| D, partner | Partnership share £60,000 only | Not qualifying income |
| E, sole trader and landlord | Turnover £18,000, rents £14,000 | £32,000, joins April 2027 |
What mistakes do firms make?
- Testing profit rather than turnover and gross rents.
- Counting a partnership profit share, or the whole of a jointly owned property.
- Relying on HMRC’s letter instead of running the test.
- Missing clients whose returns are filed late in the cycle.
- Forgetting that a client exempt for 2026 to 2027 because of an SA109 or SA107 may still join in 2027.
Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.
Related Accountapedia entries
- Preparing a practice for MTD Income Tax
- MTD for a new business: when you must start
- MTD Income Tax for partnerships
- MTD for employees with rental or side income
- Joining MTD for Income Tax voluntarily
Sources
- GOV.UK: Find out if and when you need to use making tax digital for income tax
- GOV.UK: Sign up your client for making tax digital for income tax
- GOV.UK: Work out your qualifying income for making tax digital for income tax
- GOV.UK: Find out if you can get an exemption from making tax digital for incom
- GOV.UK: Penalties for making tax digital for income tax
- GOV.UK: Check what to do if hmrc has signed you up for making tax digital for
- GOV.UK: Send quarterly updates
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.