Making Tax Digital for income tax is rolling out over the next few years, with different start dates depending on your turnover.
HMRC is phasing in the new system gradually, starting with higher earners and working down to smaller businesses over time. Here’s exactly when you’ll need to get on board.
What counts as turnover for MTD?
First things first: turnover means your total sales revenue before you deduct any expenses. So if you make £60,000 in sales but spend £15,000 on business costs, your turnover is still the full £60,000. That’s the figure that determines when you need to start using Making Tax Digital.
It’s also worth noting that “qualifying income” for MTD includes both self-employed income and property rental income combined. If you’re earning £30,000 from freelancing and another £25,000 from renting out a second property, that’s £55,000 in total qualifying income.
The MTD rollout timeline
Based on your qualifying annual turnover, here’s when you’ll need to start using Making Tax Digital-compatible software:
- £50,000 or more annually – 6 April 2026
- £30,000 or more annually – 6 April 2027
- £20,000 or more annually – 6 April 2028
- Less than £20,000 annually – currently exempt (although you may be required to use MTD in the future)
What happens when MTD starts for you?
Once you’ve hit the threshold and registered for Making Tax Digital, you’ll need to start keeping digital records of all your income and expenses using MTD-compatible software (like Hnry!). You’ll then send quarterly updates to HMRC throughout the year (due on the 7th of the month after each quarter ends), plus your annual tax return by the usual 31 January deadline.
The idea is that MTD is designed to make tax admin easier overall. Rather than facing one massive tax return at the end of January, you’re breaking everything down into manageable quarterly chunks, which will make your final tax return that much easier to complete. Less last-minute stress, more accurate records, and hopefully a smoother process all round.
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