Does Making Tax Digital apply to me?

The thresholds and dates

HMRC decides using the tax return from two years before your start date:

HMRC checks your return every year in the same way. If you're under the threshold now but go over it later, the return for that year decides when you join: for example, over £20,000 on your 2027⁠–⁠28 return means you start in April 2029.

What counts as qualifying income

Qualifying income is your gross income from these sources, before any expenses are taken off:

• turnover from all your self-employments added together
• rent and other income from UK and overseas property

These don't count:

• wages from a job taxed through PAYE
• your share of profits from a partnership
• State Pension and private pensions
• savings interest and dividends

So someone earning £45,000 from a job and £18,000 in rent has qualifying income of £18,000, and doesn't need to join until the £20,000 threshold, if at all.

Jointly owned property

If you own property with someone else, only your share of the rent counts. A house let for £50,000 a year and owned 50/50 gives each owner £25,000 of qualifying income from it.

Some examples

Each example assumes the same income on the return HMRC looks at.

Who is exempt

Some people don't have to use Making Tax Digital, either for now or for good. You're automatically exempt, without applying, if:

• you didn't have a National Insurance number before the tax year started
• you're a trustee, or a personal representative dealing with someone's estate
• you get, or transferred, Married Couple's Allowance or Blind Person's Allowance

Some people are deferred until at least April 2027, again without applying. This includes people whose return:

• claims averaging relief (for example farmers, and creators of literary or artistic work)
• claims qualifying care relief (foster and kinship carers)
• includes income from trusts and estates, or the residence pages (including people not resident in the UK)

You can apply for an exemption if you're digitally excluded: your age, health or disability means you can't use digital devices, or your religious beliefs are incompatible with using them. You apply to HMRC by phone or in writing.

Partnerships aren't included yet. HMRC says they'll need to join in future, but hasn't set a date.

Volunteering early

You can sign up before you have to, for the current or next tax year. It's a way to get used to quarterly updates before they're compulsory. See How to get ready for Making Tax Digital.

If your income goes down

Once you've joined, you stay in even if your income drops below the threshold for a year. You can leave once your qualifying income has been under the threshold for three tax years in a row.