The one number that decides it
Whether MTD ITSA applies to you comes down to your gross income — your total receipts before any expenses are deducted. This is not your taxable profit. It's not your take-home. It's the total amount invoiced or received.
For example: you earn £55,000 in fees but have £20,000 in business expenses. Your gross income for MTD purposes is £55,000 — above the threshold — even though your taxable profit is £35,000.
The thresholds and dates
| From | Gross income threshold |
|---|---|
| 6 April 2026 | Over £50,000 |
| 6 April 2027 | Over £30,000 |
| 6 April 2028 | Over £20,000 |
The threshold is assessed against your gross income from the previous tax year. So whether you're in scope for April 2027 depends on your 2025–26 gross income, which you'll know from your 2025–26 Self Assessment return.
What counts as gross income for the threshold?
HMRC adds together two income streams:
- Self-employment income — your total receipts as a sole trader, before expenses
- Property income — gross rental receipts, not profit
If you're self-employed and also rent out a property, both figures count. For example, £35,000 from self-employment and £18,000 in gross rental income gives a combined figure of £53,000 — above the April 2026 threshold.
Income from employment (PAYE) does not count towards the MTD threshold.
How to check your own position
- Find your most recent Self Assessment return — look for the turnover or total income figure from self-employment (before expenses), not the profit
- Add any gross property income
- Compare to the threshold table above
If you file through HMRC's online service, this figure is in the Self Employment section of your return under "Turnover." If you use an accountant or software, ask for the gross receipts figure.
What if I'm borderline?
If your income is close to a threshold — say, £48,000 gross — consider whether it's trending up. You may cross the next threshold in the following tax year even if you're currently just below. Signing up to MTD-compatible software before you're legally required to is sensible if you're growing.
What if I'm below the threshold?
If your gross income is below £20,000, MTD ITSA does not currently apply to you. You continue filing an annual Self Assessment return as normal.
HMRC has indicated the threshold may be lowered further in future, but no date below £20,000 has been confirmed. Until there's a formal announcement, you have no legal obligation to sign up.
What to do if MTD applies to you
- Choose MTD-compatible software — check gov.uk's approved software list. Make sure it explicitly supports MTD ITSA, not just MTD VAT (a separate, older system).
- Start keeping digital records — log all income and expenses in the software from the start of the relevant tax year.
- Know your quarterly deadlines — submissions are due within one month of each quarter end: 7 August, 7 November, 7 February, and 7 May.
- Submit the final declaration by 31 January — same deadline as the current Self Assessment return.
For the full picture of what changes and what stays the same, see the Making Tax Digital for sole traders guide.