From the 2026/27 tax year HMRC are requiring certain individuals to maintain digital records and submit quarterly returns. Below is a summary of how MTD will operate and who will be affected.
Are you required to register for MTD?
You must register for Making Tax Digital (MTD) if:
- You are registered for Self-Assessment.
- You earn income from Self-employment, property UK or overseas), or both.
- Your qualifying income exceeds the MTD thresholds:
- £50,000 in tax year 2026/27 (based on 2024/25 earnings)
- £30,000 in tax year 2027/28 (based on 2025/26 earnings)
- £20,000 in tax year 2028/29 (based on 2026/27 earnings)
How is qualifying income calculated?
- This includes the total gross income from self-employment, UK & foreign property, or both.
- If you commenced trading partway through the year, your income will be annualised. For example, a sole trader that has been trading for six months with an income of £10,000 will have a qualifying income of £20,000.
- Jointly owned properties will have income split equally.
- Property/trading income received by beneficiaries of bare trusts or interest in possession trusts will count towards qualifying income.
Income sources excluded from MTD
- Partnership Income (unless disguised investment management fees or income based carried interest is received).
- Transitional Profits from 2024/25 and the next 4 years.
- Carer Income from qualifying care receipts.
Automatic exemptions:
- Lloyd’s Underwriters.
- Individuals without a National Insurance number (before January 31st preceding a given tax year).
- Individuals who have an existing exemption from MTD for VAT.
- Trustees or personal representatives of someone who has died.
Application-based exemptions:
- Individuals for whom HMRC cannot provide a digital service e.g. if:
- It is not possible or practical for you to keep digital records due to age, disability, location or other reason.
- You cannot comply with electronic communications or keeping electronic records on religious grounds.
Non-residents
- Only UK property and self-employment income reported in the UK counts towards the qualifying income thresholds.
- Foreign property income is excluded, unless derived from UK land trade.
Quarterly MTD returns must be submitted by the 7th of the month following the quarter-end, aligning with VAT submission deadlines.
For more information regarding Making Tax Digital (MTD), how you will be affected & what you need to do, please contact us for further guidance.
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