Who has to use MTD for Income Tax — and who is exempt?

In short: You must use MTD for Income Tax if you are a sole trader or landlord with qualifying income above the phased thresholds: over £50,000 from 6 April 2026, over £30,000 from April 2027, and over £20,000 from April 2028, before any expenses are deducted, unless an exemption applies (GOV.UK: When you need to use Making Tax Digital for Income Tax).

Who must use MTD from April 2026?

Sole traders and landlords must use MTD from April 2026 if their qualifying income is more than £50,000, assessed from their 2024-25 tax return. Under Making Tax Digital, qualifying income is combined gross self-employment turnover plus gross property income, before expenses.

HMRC says around 780,000 self-employed people and landlords are mandated from April 2026, with a further 970,000 joining from April 2027 (GOV.UK: One year until Making Tax Digital for Income Tax launches). For a broader overview, see what Making Tax Digital for Income Tax is.

Who is automatically exempt?

You are automatically exempt if your qualifying income is £20,000 or less; GOV.UK uses the wording "automatically exempt" for this position (GOV.UK: Exemptions from Making Tax Digital for Income Tax). Qualifying income is still measured before expenses, so expenses do not reduce the income figure used for the threshold test.

Who can apply for an exemption?

You can apply for a digital-exclusion exemption if age, health, disability, religious beliefs, or no reasonable internet access means you cannot use MTD. You apply to HMRC by phone or letter, and HMRC gives a 28-day response target; there are 30 days to appeal a refusal.

Other exempt cases include:

• People with no National Insurance number.
• Personal representatives of a deceased person's estate.
• Cases where someone acts under a power of attorney.
• Ministers of religion and Lloyd's underwriting members.

Foster and kinship carers, and farmers or artists using income averaging, are temporarily exempt until April 2027.

Who is not in MTD yet?

Partnerships are not yet mandated for MTD for Income Tax, and HMRC says their timeline will come at a later date. Trusts are automatically exempt, and limited companies pay Corporation Tax rather than Income Tax, so they are outside MTD for Income Tax (GOV.UK: Exemptions from Making Tax Digital for Income Tax).

Landlords should still check the rules carefully, especially where property income is combined with self-employment income; see MTD for landlords.

What if your income falls after you join?

HMRC reviews your Self Assessment tax return each year to check whether you meet the threshold. Once you have started using MTD, one lower-income year does not take you out: GOV.UK says you can choose to opt out if your qualifying income has been below the relevant threshold for 3 consecutive tax years (GOV.UK: if your circumstances change).

The opt-out option then appears in your HMRC online services account (or your agent's), and only if you are eligible.

Because thresholds use gross qualifying income before expenses, a profit fall alone does not necessarily change your MTD position. It is the gross combined self-employment and property income figure that matters.

How can Taxley help with MTD for Income Tax?

Taxley's Making Tax Digital service for sole traders and landlords isn't available yet, so you can't use Taxley to keep MTD records or send quarterly updates today. We're building it to cover digital records, manual entry or CSV import, quarterly updates you review before sending, and the final declaration, for self-employment and UK and foreign property income.

Until it opens, choose a product from HMRC's list of MTD-compatible software. The MTD Income Tax page shows our progress.

Frequently asked questions

Is MTD required if I earn under £20,000?

No, if your qualifying income is £20,000 or less: GOV.UK says you are automatically exempt. Qualifying income is gross self-employment turnover plus gross property income before expenses, so check the combined gross figure rather than your profit (GOV.UK: Exemptions from Making Tax Digital for Income Tax).

Do partnerships have to use MTD?

Not yet. Partnerships are not currently mandated for MTD for Income Tax, and HMRC says their timeline will come at a later date. Trusts are automatically exempt, and limited companies pay Corporation Tax rather than Income Tax, so they are outside it too.

Is property income counted with self-employment income?

Yes. Qualifying income combines gross self-employment turnover and gross property income before expenses. A landlord who is also a sole trader adds both gross figures together and tests the total against the threshold — more than £50,000 from 6 April 2026 (GOV.UK: When you need to use Making Tax Digital for Income Tax).

How do I apply for an MTD exemption?

You apply to HMRC by phone or letter if digital-exclusion grounds apply. HMRC gives a 28-day response target, and there is 30 days to appeal a refusal.