Does MTD Apply to Your Self-Employment Income?
MTD for Income Tax applies to sole traders — those who are self-employed and not trading through a limited company — whose total qualifying income exceeds the threshold. Qualifying income includes your self-employment income plus any property rental income combined. The threshold is £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028.
What Sole Traders Must Do Under MTD
- Determine whether your qualifying income exceeds the MTD threshold.
- Choose HMRC-compatible MTD software.
- Register for MTD for Income Tax on your Government Gateway account.
- Record all business income and allowable expenses digitally throughout the year.
- Submit four quarterly updates per year.
- Submit a final declaration (replacing the traditional Self Assessment return) at year end.
MTD for Sole Traders with Multiple Trades
If you run more than one self-employed trade, each business is reported separately under MTD. Your MTD software must support multiple income sources, and you will need to keep digital records for each business distinctly.
What Counts as Qualifying Income?
Qualifying income for MTD purposes is your gross income before expenses — not your profit. It includes income from self-employment and from property letting. Check HMRC guidance carefully if you have income from both sources.