Do I need to use MTD? And if so, when?

If you’re a sole trader (a self-employed small business owner), or you make money from property, you might be wondering if you’re one of the millions who have to switch to HMRC’s new way of reporting income and costs - Making Tax Digital (MTD) for Income Tax.

The switch from Self Assessment to MTD for Income Tax began in April 2026, and will roll out to more sole traders and landlords in 2027 and 2028.

If you’re not sure whether or not you’re affected, read on.

Who will have to use MTD for Income Tax?

Anyone who is a sole trader or a landlord, with business and/or rental income over £20,000 - that’s before costs are deducted - will have to use MTD for Income Tax to report their business / rental income and costs from April 2028 at the latest.

But it’s being rolled out by HMRC in phases, depending on your ‘qualifying income’. If you earn money from both self-employment and also from renting out property, your qualifying income is your combined income from all of those sources, before costs or deductions. (If you want to know more about what exactly ‘qualifying income’ means, read our guide.) 

When do I have to start using MTD?

Here are the three phases which determine when sole traders and landlords will have to start using MTD for Income Tax.

If you have qualifying income over £50,000 in the tax year 2024/25 - you have to use MTD for Income Tax from April 2026. Find out how to get up to speed here. 

If you have qualifying income over £30,000 in the tax year 2025/26 - you have to use MTD for Income Tax from April 2027.

If you have qualifying income over £20,000 in the tax year 2026/27 - you have to use MTD for Income Tax from April 2028.

Before you can start using MTD for Income Tax you’ll have to have already filed at least one Self Assessment tax return in the previous two years. This will show HMRC when you reach the relevant threshold to start using MTD for Income Tax.

Got more questions about MTD?

Here are some handy links to help you understand it, and you’ll find lots more helpful info on our MTD for Income Tax hub.

• What does the first full year of MTD for Income Tax look like?
• How do you record multiple income streams?
• How accurate do my quarterly updates need to be?

• What penalties apply to MTD for Income Tax?

  Disclaimer: The content included in this guide is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this guide. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.