What is the £30,000 MTD threshold?

From 6 April 2027, Making Tax Digital for Income Tax is being extended to sole traders and landlords with qualifying income of more than £30,000.

HMRC will look at your qualifying income from the 2025/26 tax year to determine whether you need to start using MTD from April 2027.

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So we're looking backwards to work out what happens next.

2025/26 qualifying income over £30,000 → MTD from 6 April 2027

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Is the £30,000 MTD threshold based on turnover or profit?

it's turnover , not profit.

Qualifying income for MTD is your gross income from self-employment and property before expenses are deducted.

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Example:

Your business takes: £38,000

Your allowable business expenses are: £15,000

Your profit is: £23,000

You might look at the £23,000 and assume you're under the £30,000 MTD threshold.

But your qualifying income is based on the income before those expenses.

So your £38,000 turnover could mean MTD applies to you from April 2027.

This is why checking your turnover rather than just your profit is so important.

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What if I have more than one source of income?

This is another one to watch.

Your qualifying income can include gross income from:

✔ self-employment

✔ property

✔ more than one self-employed business

So you can't necessarily look at each one separately.

For example:

Self-employed income: £22,000

Property income: £12,000

Combined qualifying income: £34,000

Even though neither source individually exceeds £30,000, your combined qualifying income could put you above the MTD threshold.

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Does my PAYE salary count towards the £30,000 threshold?

The MTD qualifying income isn't your total income from every source.

It focuses on qualifying income from self employment and property.

So if you have employment income as well as a side business, don't add your PAYE salary to your business turnover when checking the £30,000 threshold.

Your circumstances can become more complicated where you have multiple sources of income, so check your position if you're unsure.

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What happens if I earned exactly £30,000?

The current threshold is more than £30,000.

So there's a difference between:

£30,000

and

£30,001.

But please don't base your MTD planning on an estimate in your Notes app.

Check your actual qualifying income for 2025/26.

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I earned more than £30,000 in 2025/26 — what do I need to do?

If you're within MTD from April 2027, you'll need to get ready to:

Keep digital records

Your business income and expenses will need to be recorded digitally.

Use MTD compatible software

You'll need software capable of working with Making Tax Digital for Income Tax.

Submit quarterly updates

You'll send summaries of your income and expenses to HMRC throughout the year using your compatible software.

Finalise your tax affairs after year end

You'll still need to finalise your tax position and submit your tax return after the end of the tax year.

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Does MTD mean four tax returns a year?

Nope.

This is probably one of the biggest MTD misconceptions.

Quarterly updates aren't four complete Self Assessment tax returns.

They are updates based on the digital records you've been keeping throughout the year.

You'll then finalise your tax position after the tax year has ended.

So it's more regular reporting/bookkeeping not four January style tax returns every year.

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When does the £30,000 MTD threshold start?

6 April 2027.

The important dates are:

2025/26 tax year: HMRC uses your qualifying income to determine whether you're over £30,000.

6 April 2027: MTD starts for the £30,000+ group.

That's why 2026 is the time to get ready, not April 2027.

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Do I need to wait for HMRC to contact me?

Not always.

HMRC may contact people it identifies as needing to use MTD, but it remains your responsibility to check whether the rules apply to you.

If you think your 2025/26 qualifying income was over £30,000, don't wait for a letter before looking into it.

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What should I do now?

If you think the £30,000 threshold applies to you, start preparing before April.

That means:

✔ check your 2025/26 qualifying income

✔ check whether your current software is MTD compatible

✔ move away from paper records where necessary

✔ get your bank feeds connected

✔ get into the habit of keeping records updated regularly

✔ speak to your accountant or bookkeeper

And please don't leave all of this until 6 April 2027.

Future you doesn't deserve that.

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Do I need an accountant for MTD?

Nope!.

You can manage MTD yourself if you're confident using compatible accounting software, maintaining your digital records and completing the necessary submissions by the deadlines.

But you also don't get extra points from HMRC for doing everything yourself.

If bookkeeping is already the job that gets pushed to the bottom of your list every month, adding quarterly reporting/submissions probably isn't going to make you suddenly fall in love with it.

We can help.

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How The Highlight Partnership can help with MTD

We're Millie & Tyler , Highlight is a family run accountancy and bookkeeping practice based in Hornchurch, Essex, supporting sole traders and small businesses across Essex and all over the UK.

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We can help you work out whether MTD applies to you and get your software set up ready for April 2027.

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For our bookkeeping clients, we work using Xero, with bank feeds helping us keep records updated without constantly asking you to send bank statements.

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You'll also have Hubdoc or Smart Capture for uploading and storing receipts and paperwork digitally.

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And because we're working on your bookkeeping throughout the year, quarterly reporting becomes part of the process rather than another four deadlines for you to panic about.

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MTD is coming. The panic doesn't have to.

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Read our complete Making Tax Digital guide]

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£30,000 MTD FAQs

I'm a sole trader earning £35,000. Do I need MTD?

If your qualifying income for 2025/26 was over £30,000, you will generally need to use Making Tax Digital for Income Tax from 6 April 2027, subject to the eligibility and exemption rules.

Remember, qualifying income is your gross self employment and property income before expenses.

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I'm a sole trader with £35,000 turnover but only £20,000 profit. Do I need MTD?

Yes.

The threshold isn't based simply on your profit after expenses. If your qualifying income was over £30,000 for 2025/26, you may need to use MTD from April 2027.

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I earn £25,000 self-employed and £20,000 from PAYE. Do I need MTD?

Your PAYE salary isn't added to your self employment income when determining your MTD qualifying income.

The MTD test looks at qualifying self-employment and property income.

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I earn £25,000 self employed and receive £10,000 property income. Do I need MTD?

Yes.

Qualifying self employment and property income can be combined. In this example, the combined amount would be £35,000 before considering the detailed qualifying income rules.

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I'm under £30,000. Will I ever need MTD?

Possibly.

The MTD threshold is due to reduce again to more than £20,000 from April 2028, based on qualifying income for 2026/27 (the current tax year we're in).

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Can my accountant do the quarterly updates?

Yes. An authorised agent can help manage your Making Tax Digital obligations.

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Can I start getting ready now?

Absolutely.

In fact, we'd recommend it.

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Getting your bookkeeping, software and digital records organised before April 2027 gives you time to get used to the process rather than changing everything at the point MTD becomes mandatory.

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