What Is MTD for Income Tax? Don’t Assume It Doesn’t Apply to You
What Is MTD for Income Tax? Don’t Assume It Doesn’t Apply to You
Are you quietly assuming that Making Tax Digital is for “other people”? It might be time to take another look…
If you’re a limited company director, employed full-time, or even running a modest side hustle or letting out a rental property — you might be caught under the next wave of Making Tax Digital (MTD) for Income Tax.
This isn’t just for big businesses or full-time self-employed people. MTD is being phased in over the next few years, and many more people will be brought into the fold.
What Is MTD for Income Tax?
MTD for Income Tax means that if your qualifying income from self-employment and/or property reaches certain thresholds, you’ll need to:
Keep digital records
Use MTD-compatible software
Submit quarterly updates
Send a final end-of-year declaration
It replaces the old system of one big Self Assessment return with a more structured, digital-first process.
So Who
Does
It Apply To?
Let’s break it down by income threshold and tax year:
April 2026 – If your qualifying income is over £50,000 in the 2024–25 tax year
April 2027 – If your qualifying income is over £30,000 in the 2025–26 tax year
April 2028 – If your qualifying income is over £20,000 in the 2026–27 tax year
⚠️ “Qualifying income” means gross income (before expenses) from all self-employed work or rental income – not just profit!
Examples That Might Surprise You
You’re employed full-time but have an Airbnb rental bringing in £52k/year – you’re in!
You run a side hustle selling handmade goods on Etsy and turned over £55k last year – also in!
You have three small rental properties jointly owned – the total income per person could nudge you over the limit.
What Steps Should You Take Now?
If you think you might be affected, it’s worth taking action now to stay ahead of the curve.
Work out your qualifying income – look at your total gross rental and/or self-employed income for the current tax year
Choose MTD-compatible software – like Xero, QuickBooks, or FreeAgent
Sign up for MTD for Income Tax via your Government Gateway when registration opens
Digitalise your record-keeping – no more paper ledgers or shoeboxes of receipts
Prepare for quarterly submissions – these replace the annual “big crunch”
Submit a final declaration by 31 January following the tax year-end
Not Affected Yet?
If your income falls below the current thresholds, you’re off the hook – for now. Breathe easy and enjoy your weekend! 🎉
But if you’re anywhere near the limits, it’s smart to get systems in place early. You’ll avoid the scramble later and keep your finances running smoothly.
If you’re unsure where you stand or need help choosing the right tools and approach, I’m always here to help you make sense of it all.
Let’s make tax simple — not stressful.
Lisa x
