Making Tax Digital requirements must be checked separately for VAT and Income Tax, using the business type, qualifying income and applicable start date. A VAT registration or software subscription does not by itself establish the person’s MTD for Income Tax position.
From 6 April 2026, the Income Tax requirement applies to qualifying self-employment and property income above £50,000 under the relevant rules. Check the reference year and exemptions rather than using net profit.
Identify the taxpayer and income sources
List the person's self-employment and property activities, the legal ownership and the relevant tax years. Keep a limited company's income separate from an individual's own trading or rental income. Record gross receipts as well as profit so the assessment is not based on the wrong measure. A person with both a trade and rental property needs the qualifying-income calculation to consider the relevant sources together under the applicable rules.
For Income Tax, qualifying income above £50,000 in 2024–25 triggers the requirement from 6 April 2026; above £30,000 in 2025–26 leads to 6 April 2027, and above £20,000 in 2026–27 leads to 6 April 2028. Check exemptions and the detailed qualifying-income rules. HMRC says the absence of a letter does not remove the responsibility to establish whether and when the requirement applies. [1]
Keep VAT and Income Tax assessments separate
Prepare a short obligations list for each tax service the business uses. A VAT-registered sole trader may already keep digital records for VAT while still needing a separate Income Tax assessment and setup. Conversely, an individual can fall within MTD for Income Tax without being VAT registered. One software subscription or one tax reference does not settle both positions.
Record the basis and date of each conclusion, including any exemption or future start date being considered. If the business structure changes, revisit the list rather than carrying the old result forward automatically. Incorporation, a new property interest or an additional trade can alter the facts requiring review. A dated assessment makes it easier to identify what changed without recreating the whole tax history from memory.
Translate the start date into practical tasks
Once the position is established, identify the digital records, software, authorisation and submission process required. Assign responsibility for transaction capture, review and filing. An agent may carry out some tasks, but the scope needs to say which activities and reports are covered. Do not assume that an existing annual tax-return engagement includes all new bookkeeping or quarterly work without agreement.
If the required start date has already passed, establish which records and submissions are outstanding and address them promptly. Separate the current digital-reporting work from any earlier Self Assessment return still due. Moving into MTD does not erase the preceding year's obligations. Prepare an action schedule showing the relevant periods and owners instead of treating the transition as one undifferentiated software-installation task.
Check exemptions through the proper process
Where there may be an exemption, identify the specific circumstances and whether an application or other action is needed. Keep supporting evidence and HMRC correspondence. Do not infer an exemption solely because the business has always used paper records or because the owner prefers an annual meeting with an accountant. The applicable rules and process need to be reviewed against the person's actual situation.
An exemption from MTD does not necessarily remove ordinary tax reporting and record-keeping obligations. Confirm what continues and how it will be completed. If the exemption is temporary or facts may change, record the review point. This avoids a later assumption that an earlier administrative decision permanently settles the person's obligations regardless of future income or circumstances.
Maintain an annual eligibility review
Add the qualifying-income assessment to the annual tax-return review and record the resulting future start date where relevant. Keep the calculation separate from a profit forecast or VAT turnover test. Ask the reviewer to explain unusual items and ownership shares rather than relying on a single dashboard total. The supporting schedule should show how the figure used for the decision was derived.
Read Preparing for MTD for Income Tax for implementation preparation and Making Tax Digital readiness review to discuss an MTD applicability review. Provide the income sources, relevant gross figures and tax years, together with any HMRC notice. The initial aim is a documented answer about which regime applies, when action is required and what work must follow, rather than selecting software before the obligation is understood.
Retain the assessment even if the person is currently below a threshold. That record can support the next review and show which figures were considered. Update it when a corrected tax return or newly identified income source changes the information on which the original conclusion depended.
Illustrative scenario
A landlord also runs a sole trade. They review combined qualifying gross income from the relevant year and confirm the required start date before choosing compatible software.
Preparation checklist
- Identify applicable taxes
- Check qualifying gross income
- Confirm the reference year
- Review exemptions and start dates
Frequently asked questions
Is the Income Tax threshold based on net profit?
No. Use the applicable qualifying-income rules and reference year, including relevant self-employment and property receipts, rather than substituting net profit.
Does using MTD for VAT also enrol me for Income Tax?
No. The regimes require separate assessment and setup. Check the Income Tax position even if VAT reporting already works through software.
Can I wait for an HMRC letter before checking?
HMRC says it remains your responsibility to establish whether and when MTD applies, even if no letter arrives.
Does an MTD exemption remove all tax-return duties?
No. Confirm the continuing Self Assessment and record-keeping requirements, and retain evidence of the exemption and any review date.
Official sources
Sources checked: 8 September 2026. Check the linked guidance for subsequent changes.
General information only. The appropriate action depends on your circumstances and the applicable jurisdiction.
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