MTD Self-employed
Tax Question
My client had turnover from self-employment of £55,000 in the 2024/25 tax year, which means he has to enter Making Tax Digital (MTD) from 6 April 2026. The turnover will be much less in the 2025/26 year and in future years. Does he still have to enter the MTD regime from 6 April 2026?
Tax Answer
Yes, he will still need to enter MTD with 6 April 2026 as his “digital start date” because the qualifying income threshold is based on figures submitted for the 2024/25 tax year. The exception to this is if all of the income sources which lead to qualification for MTD have completely ceased.
As a reminder, the thresholds for entering MTD for individuals are based on qualifying income being above these thresholds in the previous tax year:
- From 6 April 2026: Business income or property income over £50,000
- From 6 April 2027: Business income or property income over £30,000
- From 6 April 2028: Business income or property income over £20,000
Your client will be able to apply to leave MTD if his qualifying income is below the threshold for 3 consecutive tax years. So, the earliest opportunity that he will be able to exit MTD is for the 2028/29 tax year (if his qualifying income is less than £30,000 in the 2025/26 tax year and less than £20,000 in the 2026/27 and 2027/28 tax years).
In addition, there are also some exemptions from the MTD regime for 2026/27 as follows in case any of these apply to your client. Some of these exemptions are as a result of HMRC systems not yet being able to deal with these situations:
- Individuals who are digitally excluded because of age, disability, location, religious grounds, or where it isn’t reasonable or practical to use a computer for another reason.
- Individuals with no national insurance number on 31 January before the start of the tax year.
- Individuals claiming qualifying care relief who have no other income sources which are qualifying income for MTD.
- Individuals with a power of attorney or deputyship.
- Non-UK resident foreign entertainers and sportspeople who have no other income sources which are qualifying income for MTD.
- Lloyd’s underwriters.
- Ministers of religion.
- Individuals claiming Married Couples Allowance or Blind Persons Allowance.
- Individuals who would need to include the SA109 on their tax return.
Note that it is intended that HMRC will be bringing some of the taxpayers in the above categories into the scope of MTD in the coming years. It is expected that those who need to submit an SA109 will enter MTD as of 6 April 2027.
For more information, please contact us at: consultancy@vantagefeeprotect.com
Emma Buckley
Tax Advisor
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