Does Making Tax Digital affect you, and when?

Making Tax Digital for Income Tax is being rolled in over three years, and which year you join depends on your income. It currently applies to sole traders and landlords.

The three phases

• From April 2026: Qualifying income over £50,000.
• From April 2027: Qualifying income over £30,000.
• From April 2028: Qualifying income over £20,000.

What counts as qualifying income

Qualifying income is your gross income, meaning your turnover before you take off any expenses, from self-employment and property combined. So a tradesperson turning over £35,000 with £20,000 of rental income has £55,000 of qualifying income, which means they were in from April 2026.

What does not count: wages or salary taxed through PAYE, pensions, dividends, savings interest, and capital gains. Those sit outside the qualifying income test.

How HMRC decides your start date

HMRC looks at your most recent Self Assessment return. For the April 2026 phase, that means your 2024/25 return. As the thresholds drop in later years, more and more people are brought into scope, until almost everyone who files a Self Assessment is included.

Two things people miss

• HMRC will write to people they believe are in scope, but the legal duty to check is yours. Not receiving a letter does not mean you are exempt.
• Once you are in, you stay in even if your income later dips below the threshold, unless you formally claim an exemption.

Worth knowing: limited companies are not affected, because Making Tax Digital does not apply to corporation tax. If you are not sure which phase you fall into, this is the sort of five-minute question a good accountant can answer for you on the spot. Mazuma checks this kind of thing for clients as a matter of course.