Do you need to use MTD for Income Tax?
MTD for Income Tax applies to sole traders and landlords with qualifying income over specific thresholds. For tutors working alone or in a small firm, this means you must check your total self-employment income before expenses.
Qualifying income is your turnover from tutoring, not your profit. It is tested as MORE than the threshold. If your income is exactly 50,000 pounds, you are not over the limit and do not need to use MTD for the 2026-27 tax year.
The thresholds are set in law by SI 2026/336 regulation 27. They change over time as more businesses are brought into the system.
| Tax year tested | Threshold | MTD applies from |
|---|---|---|
| 2024-25 | Over 50,000 pounds | 6 April 2026 |
| 2025-26 | Over 30,000 pounds | 6 April 2027 |
| 2026-27 | Over 20,000 pounds | 6 April 2028 |
If your qualifying income is 20,000 pounds or less, you have an automatic permanent exemption. You do not need to use MTD for Income Tax, even if your income rises in future years, as long as you were exempt based on the initial test.
What counts as qualifying income for tutors?
Qualifying income includes all income from your tutoring business before you deduct any expenses. This includes hourly fees, course fees, and any other payments for teaching services.
If you have multiple income sources, such as tutoring and rental property, you must add them together before testing the threshold. All UK properties are treated as one business, and all foreign properties as another.
Certain income is not counted towards the MTD threshold. This includes employment income through PAYE, dividends, State and private pensions, and qualifying care relief. If you are a partner in a partnership, your share is not counted yet, as partnerships are not in scope.
What goes in your quarterly updates?
MTD requires four quarterly updates per year. These are summaries of your income and expenses, not full tax returns. Each update must cover the period from the start of the tax year (6 April) to the end of that quarter.
You must send an update even if you had no income or expenses in that period. The categories used are the same as those in Self Assessment.
For tutors, typical expense categories might include teaching materials, travel to student locations, and a portion of working from home costs. Under the cash basis, which is the default method, you record income when you receive it and expenses when you pay them.
- Income: Total fees received for tutoring services.
- Expenses: Costs directly related to your teaching business, such as books, software, and travel.
- Cumulative totals: Each update shows the total from 6 April to the end of the current quarter.
Quarterly update deadlines
You must submit each quarterly update by the specified deadline. You can send the update from the end of the period up to the deadline. If you expect no further transactions, you can send it up to 10 days before the period ends.
The deadlines are fixed dates. Missing a deadline can result in penalty points, although there is a grace period for the first year of MTD ITSA.
| Period ends | Update due by |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
Penalties and exemptions
For the 2026-27 tax year, there are no penalty points for missing a quarterly update deadline. However, you must still keep digital records and send the updates. Penalty points still apply to the tax return deadline.
From 2027-28, missing a quarterly update deadline results in one penalty point. If you accumulate 4 points, you face a 200 pound penalty, plus 200 pounds for each subsequent missed deadline.
If you become exempt in 2026-27, you return to the current Self Assessment penalties for that year. From April 2027, the new MTD penalties apply to everyone who submits a personal Self Assessment return.
How TradeKit helps tutors
TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS). The software helps you create and store digital records for your tutoring income and expenses. It prepares the quarterly updates required by HMRC, ensuring they are submitted on time.
You can use TradeKit to manage your records and send updates. It also helps you prepare your final tax return. The software supports the cash basis accounting method, which is the default for most sole traders.