1️⃣ What is Making Tax Digital (MTD) for Income Tax?

Making Tax Digital (MTD) is HMRC’s new system designed to modernise the way landlords and self-employed individuals report their income.

From April 2026, MTD for Income Tax Self Assessment (ITSA) will replace the traditional Self Assessment process for those over certain income thresholds.

You’ll need to:

• Keep digital records
• Submit quarterly updates to HMRC
• File an End of Period Statement (EOPS) and a Final Declaration each tax year

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2️⃣ What Counts as “Qualifying Income”?

HMRC defines qualifying income as your total gross income from:
🏡 Property – e.g. rental income before deducting any expenses
💼 Self-employment – i.e. your turnover as a sole trader before expenses

👉 Importantly, qualifying income is calculated before expenses, not profit.

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3️⃣ The Income Thresholds You Need to Know

Qualifying Income (combined)	MTD Start Date
Over £50,000	April 2026
Between £30,000 and £50,000	April 2027

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4️⃣ Example: Combining Property and Self-Employment Income

Let’s say you have:

• £40,000 in gross property income, and
• £20,000 in gross self-employment income

✅ Total qualifying income = £60,000

Because this total is over £50,000, you’ll need to follow MTD rules from April 2026 — even though neither income source exceeds £50,000 on its own.

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5️⃣ What If You Own Property Jointly?

If you own property with someone else, your share of the income counts toward your qualifying income.
For example, if a property generates £80,000 in rent split 50/50, you’d include £40,000 in your qualifying income calculation.

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6️⃣ How to Check if MTD Applies to You

✅ Add up all gross property income (including jointly owned shares)
✅ Add all gross self-employment turnover
✅ If the total is above the relevant threshold, MTD applies from that date.

💡 Tip: Check your 2024/25 Self Assessment tax return carefully — HMRC will use this year to determine if you’re in the MTD regime from April 2026.

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7️⃣ Get MTD-Ready Early

Switching to MTD doesn’t need to be stressful. The key is early preparation:

• 📊 Keep accurate, digital records of income and expenses
• 💻 Use MTD-compatible software (e.g. FreeAgent – included for our clients)
• ⏰ Plan for quarterly submissions rather than one annual return

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✍️ Final Thoughts

Understanding what counts as qualifying income is the first step to staying compliant under MTD. Whether your income comes from property, self-employment, or both, the combined total determines your reporting obligations.

📲 Need help checking if MTD applies to you?
Get in touch with Taxes Done Right Ltd — we’ll assess your position, set you up with compliant software, and handle the submissions for you.