Who needs MTD for Income Tax and when

Who it applies to

GOV.UK says you need to use MTD for Income Tax if all of these apply (source):

• you are a sole trader or landlord registered for Self Assessment
• you get income from self-employment, property, or both
• your qualifying income is more than the threshold for the relevant tax year

Partnerships do not need to use it yet. HMRC says it will set out a timeline for them later.

The three thresholds

“More than” matters: exactly £50,000 is not over the threshold. If your qualifying income is £20,000 or less, GOV.UK says you are automatically exempt for now.

Use the checker to try your own figures.

What counts as qualifying income

Qualifying income is your total income from self-employment and property before expenses (turnover), based on the tax return for the earlier year. It can come from more than one business or property.

GOV.UK's example: £25,000 of rental income plus £27,000 of self-employment income gives qualifying income of £52,000.

These do not count: employment (PAYE) income, your share of partnership profit as an individual partner, dividends (including from your own company), the State Pension and private pensions.

Other points from GOV.UK (source):

• Jointly owned property: only your share counts. Half of £50,000 of rent is £25,000.
• A source you stopped: still counts if you have another self-employment or property income that carries on.
• All sources stopped before 6 April 2026: you will not need MTD. Tell HMRC, or it may sign you up based on the information it has.
• Short or long first year: HMRC annualises sole trader income (6 months' trading is doubled). Landlords need to annualise their own figure.
• Cash basis and VAT registered: if you include VAT in your income, it counts.
• Not counted: transition profits from basis period reform, qualifying care relief, UK REIT and PAIF income, and one-off transactions in UK land.

Letters from HMRC and being signed up

HMRC reviews your tax return each year and writes to you if you are over the threshold. GOV.UK is clear that if you do not get a letter it is still your responsibility to check and sign up.

From September 2026 HMRC began signing up, in stages, people who should be using MTD for 2026 to 2027 but have not signed up (GOV.UK). To sign up yourself you must be registered for Self Assessment and have sent a tax return in the last 2 years (GOV.UK).

HMRC said on 12 August 2026 that more than 436,000 sole traders and landlords had sent their first quarterly update and over 570,000 had signed up (GOV.UK news).

Can you leave again?

You can opt out if your qualifying income has been below the relevant threshold for 3 tax years in a row, or if you amend last year's return so it falls below. Otherwise you can keep using MTD voluntarily (GOV.UK).

Questions