How the threshold is calculated
For Making Tax Digital for Income Tax (MTD ITSA), HMRC looks at your total qualifying income from self-employment and property. This is your turnover, which is the income before you deduct any expenses.
You must add your self-employment income and your property income together. If this combined total is more than the threshold for the relevant tax year, you must use MTD ITSA.
The threshold is tested as MORE than the figure. For example, if the threshold is 50,000 pounds, exactly 50,000 pounds is not over the limit.
- Sole traders and landlords with qualifying income over 50,000 pounds in 2024-25 must use MTD ITSA for 2026-27, from 6 April 2026.
- Over 30,000 pounds in 2025-26, from 6 April 2027.
- Over 20,000 pounds in 2026-27, from 6 April 2028.
What counts as qualifying income
Qualifying income is the total income from self-employment and property before expenses. It is taken from the tax return you submitted in the previous tax year.
All UK properties are treated as one UK property business. All foreign properties are treated as one foreign property business. You do not count each rental property individually for the threshold test.
Income that is not counted
Some types of income do not count towards the MTD ITSA threshold. You do not need to include these when working out if you are over the limit.
- Employment income through PAYE
- A partnership share as an individual partner
- Dividends
- State and private pensions
- Qualifying care relief
- Basis period reform transition profits
- One-off transactions in UK land in a single tax year
Automatic exemption
If your qualifying income is 20,000 pounds or less, you have an automatic permanent exemption from MTD ITSA. You do not need to apply for this exemption; it applies automatically if your income is at or below this level.
Signing up with multiple income sources
When you sign up for MTD ITSA, you sign up each income source if you have more than one. The sign-up process does not ask about other income sources or gains; those are added in compatible software before the tax return is submitted.
You can sign up for the current tax year or the next one before you are required to. If HMRC signs you up, their confirmation arrives in HMRC online services or by post.
Using software for multiple businesses
Compatible software must create and store digital records, work with your chosen accounting period, and send the quarterly updates. An all-in-one product also submits the tax return.
You can use more than one product, but only one product for each separate submission, and the records must be digitally linked between them.
TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS).