MTD Income Thresholds: Who Must Comply and When

Introduction

MTD for Income Tax (MTD ITSA) does not apply to everyone at once. HMRC is rolling it out in phases based on income thresholds.

This guide explains the current thresholds, how HMRC measures your income, and what to do if you are close to the limit.

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What is the MTD income threshold?

The MTD income threshold is based on your total gross income from:

• self-employment, and
• property rental income

It is calculated before expenses. It is not based on profit.

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Current thresholds and dates

HMRC's current plan is:

• Over GBP 50,000: MTD ITSA from April 2026
• Over GBP 30,000: MTD ITSA from April 2027
• GBP 30,000 or below: not mandated yet (subject to change)

If you are VAT registered, you already use MTD for VAT regardless of income.

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How HMRC decides if you are above the threshold

HMRC looks at your total gross income for a tax year. For example:

• Self-employment income GBP 40,000 + rental income GBP 15,000 = GBP 55,000 total
• This puts you into the April 2026 MTD ITSA group

If your total is GBP 35,000, you are expected to join from April 2027.

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What if you are close to the threshold?

If your income is near the limit:

• track your totals throughout the year
• plan for digital record keeping early
• check HMRC updates before the start of the next tax year

Even if you are not mandated yet, moving to digital records can make future compliance easier.

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Are there exemptions?

HMRC can grant exemptions in limited cases, such as:

• digital exclusion (no access or ability to use digital tools)
• certain religious objections to digital record keeping
• other specific circumstances accepted by HMRC

If you believe you qualify, you must apply directly to HMRC.

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How QTax helps

QTax keeps your records digital from day one, so you are ready when MTD ITSA applies. You can track income, store expenses, and prepare submissions without switching systems later.

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FAQs

Is the threshold based on profit or turnover?

It is based on total gross income before expenses, not profit.

Do I add self-employment and rental income together?

Yes. HMRC considers the combined total of self-employment and property income.

What if my income drops below the threshold after I join?

HMRC guidance can change, but generally you remain in MTD ITSA once you are mandated. Always check the latest rules.

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Conclusion

The MTD income thresholds determine when you must switch to digital record keeping and quarterly updates. If your combined income is close to GBP 50,000 or GBP 30,000, start preparing now so the transition is smooth.