MTD for hairdressers and barbers: thresholds, chair rent and cash takings

What the thresholds mean for a chair renter

MTD for Income Tax starts at the top and works down. The first group is sole traders and landlords with qualifying income over 50,000 pounds in 2024-25, who use it for 2026-27 from 6 April 2026. Lower thresholds follow in later years.

The threshold is tested as more than the figure, so exactly 50,000 pounds is not over it. The figures are set in law by SI 2026/336 regulation 27, in force 1 April 2026.

Qualifying income is your total income from self-employment and property before expenses (your turnover), taken from the tax return you sent for the previous tax year. Add self-employment income and property income together before you test the threshold.

Not everything counts towards the threshold. Employment income through PAYE, a partnership share as an individual partner, dividends, State and private pensions, qualifying care relief, basis period reform transition profits, and one-off transactions in UK land in a single tax year are all left out. Partnerships are not in scope yet, with no date published.

Cash takings, chair rent and the records behind them

Cash basis is the default method of accounting from 2024-25, and you opt out to use traditional accounting. Under cash basis you record income when the money is received and expenses when a bill is paid.

Most self-employed hairdressers and barbers take a mix of card payments and cash. Both are income, and income has to sit in a digital record: a digital record is a record of income or an expense created and stored in compatible software. Cash taken on a Saturday and written on a pad is not a digital record until it is entered into the software.

Chair rent is one of the regular outgoings of renting a chair or station. Under cash basis it is recorded when you pay it, in the same expense category you would use in Self Assessment.

You can use more than one product, but only one product for each separate submission, and the records must be digitally linked between them. HMRC's examples of a digital link include:

• Linked cells in a spreadsheet, where a formula mirrors the source value
• Emailing a spreadsheet containing digital records so it can be imported
• Transferring records on a portable device such as a memory stick for someone to import
• CSV and XML import and export, and downloading and uploading files
• An automated transfer using an API

Keep digital records for at least 5 years after the 31 January submission deadline for the tax year, the same period as Self Assessment. Once a record has been sent to HMRC in a quarterly update it must not be moved by hand, either within the software or between products: no writing it out in another cell or another product, and no cut and paste or copy and paste.

No CIS in your updates

CIS is the Construction Industry Scheme, which covers construction work. Hairdressing and barbering is not construction work, so CIS deductions do not form part of your income figures and there is no gross payment status to hold.

That keeps the update categories simple: your takings on one side, your salon costs on the other. If you also take on construction work, our CIS guides cover how deductions work there.

What each quarterly update contains

A quarterly update is a set of totals by income and expense category, cumulative from 6 April. It is a summary, not a tax return.

The categories are the same income and expense categories as Self Assessment. HMRC receives the category totals, not the individual transactions behind them.

You must still send an update for a period with no income and no expenses. You can send from the end of the period up to the deadline, or up to 10 days before the period ends if you expect no further transactions.

There are two update period types: standard, aligned to the tax year from 6 April to 5 April, and calendar, from 1 April to 31 March. The deadlines are the same for both, and the accounting period cannot be changed after the first quarterly update has been sent.

You can send updates more often than quarterly, but each must cover the full update period. After each update you can see an estimate of your tax bill in your software or in HMRC online services.

When the deadlines fall

Four updates a year, spread across the tax year. Each period ends on the 5th and the update is due by the 7th of the following month.

The tax return is submitted after the tax year, and the tax is paid by 31 January. In 2026-27 there are no penalty points for missing a quarterly update deadline, but points still apply to the tax return deadline, and digital records and updates are still required.

For tax years after 2026-27, one penalty point is added for each missed submission deadline, with a threshold of 4 points, then a 200 pound penalty, then a further 200 pound penalty each time another submission deadline is missed. You only get one point per deadline, even with several businesses and several late updates.

Signing up, and what the software has to do

You sign up from Self Assessment: you must be registered for Self Assessment and have submitted a tax return in the last 2 years. You sign up each income source if you have more than one. An identification check may be required, and the confirmation arrives in HMRC online services or by post.

From September 2026 HMRC signs up anyone who needs it for 2026-27 and has not signed themselves up. It happens in stages, using only the information HMRC already holds. You can also sign up for the current tax year or the next one before you are required to, and you still submit the Self Assessment tax return for the tax year before you start using MTD.

HMRC does not provide software, and does not approve, endorse or recommend any product. Compatible software must create and store digital records, work with the chosen accounting period, and send the quarterly updates. An all-in-one product also submits the tax return.

You authorise the software so it connects to HMRC, and repeat that every 18 months without repeating the identity check. Software defaults to an accounting period aligned to the tax year; if your accounting period runs 1 April to 31 March you select calendar periods before the first update.