The £30,000 MTD threshold: your 2025/26 tax return decides whether you’re in from April 2027 October 5, 2026 Kieron McGahan Post in Uncategorized The £30,000 MTD threshold: your 2025/26 tax return decides whether you’re in from April 2027 Making Tax Digital for Income Tax started in April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold drops to £30,000 in April 2027, and to £20,000 in April 2028. If your income sits between £30,000 and £50,000, the tax return you file this winter is the one that puts you in. How HMRC decides For the April 2027 phase, HMRC looks at your 2025/26 income, as reported on the Self Assessment return due by 31 January 2027. Nothing else needs to happen for you to be caught. File the return, and if the figures are over the line, you are in scope. What counts The test is gross income, not profit. It is turnover from self-employment and gross rents from property, added together. Expenses don’t reduce it, so a business with £32,000 of turnover and £10,000 of profit is over the threshold. Employment income, pensions and dividends don’t count. If you own property jointly, it is your share of the rent that counts. If you started trading part-way through 2025/26, the figure is adjusted to what a full year would have looked like. A strong start late in the year can put you over the threshold even though the return itself shows a much smaller number. Start the habit before April If you think you’ll be in scope, don’t wait until April 2027 to change how you handle your records. Between now and then, move from sending your accountant everything once a year to sending it every quarter, or every month if that suits you better. It’s the same information, just in smaller pieces and much closer to the time. The other half of the habit is getting paperwork from the people you deal with when it is issued, not when you need it. CIS subcontractors are a good example. Contractors must give you a payment and deduction statement within 14 days of the end of each tax month, so there is one to collect every month. Missing ones are far easier to chase while the job is fresh than eleven months later. The same applies to letting agent statements, customer remittances and supplier invoices. Why start now: A quarter of paperwork takes minutes to sort. A year of it takes a weekend and usually leaves gaps. Errors and missing items show up while you can still do something about them. By the time quarterly updates are compulsory, sending information on time is already routine. The year-end return becomes a final tidy-up rather than a rebuild. Before you file in January Add up your gross 2025/26 income from every self-employment and property source, before expenses. If the total is over £30,000, plan on being in MTD from April 2027 and don’t wait for the return to confirm it. If you’re close to the line, check the figures properly before you file rather than after. Some exemptions exist, and some need a claim to HMRC. They don’t apply automatically. The concession on penalty points for late quarterly updates currently covers 2026/27 only, so don’t assume it will help in your first year. If your income is anywhere near £30,000, get in touch and I can help you work out where you stand and set up a routine that works before the January return is filed.
The £30,000 MTD threshold: your 2025/26 tax return decides whether you’re in from April 2027 Making Tax Digital for Income Tax started in April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold drops to £30,000 in April 2027, and to £20,000 in April 2028. If your income sits between £30,000 and £50,000, the tax return you file this winter is the one that puts you in. How HMRC decides For the April 2027 phase, HMRC looks at your 2025/26 income, as reported on the Self Assessment return due by 31 January 2027. Nothing else needs to happen for you to be caught. File the return, and if the figures are over the line, you are in scope. What counts The test is gross income, not profit. It is turnover from self-employment and gross rents from property, added together. Expenses don’t reduce it, so a business with £32,000 of turnover and £10,000 of profit is over the threshold. Employment income, pensions and dividends don’t count. If you own property jointly, it is your share of the rent that counts. If you started trading part-way through 2025/26, the figure is adjusted to what a full year would have looked like. A strong start late in the year can put you over the threshold even though the return itself shows a much smaller number. Start the habit before April If you think you’ll be in scope, don’t wait until April 2027 to change how you handle your records. Between now and then, move from sending your accountant everything once a year to sending it every quarter, or every month if that suits you better. It’s the same information, just in smaller pieces and much closer to the time. The other half of the habit is getting paperwork from the people you deal with when it is issued, not when you need it. CIS subcontractors are a good example. Contractors must give you a payment and deduction statement within 14 days of the end of each tax month, so there is one to collect every month. Missing ones are far easier to chase while the job is fresh than eleven months later. The same applies to letting agent statements, customer remittances and supplier invoices. Why start now: A quarter of paperwork takes minutes to sort. A year of it takes a weekend and usually leaves gaps. Errors and missing items show up while you can still do something about them. By the time quarterly updates are compulsory, sending information on time is already routine. The year-end return becomes a final tidy-up rather than a rebuild. Before you file in January Add up your gross 2025/26 income from every self-employment and property source, before expenses. If the total is over £30,000, plan on being in MTD from April 2027 and don’t wait for the return to confirm it. If you’re close to the line, check the figures properly before you file rather than after. Some exemptions exist, and some need a claim to HMRC. They don’t apply automatically. The concession on penalty points for late quarterly updates currently covers 2026/27 only, so don’t assume it will help in your first year. If your income is anywhere near £30,000, get in touch and I can help you work out where you stand and set up a routine that works before the January return is filed.