MTD Knowledge Base

Does Making Tax Digital apply to me? And what actually is it?

Right, what is this MTD thing?

You've probably seen the letters. Maybe binned a few. Making Tax Digital — MTD for short — is HMRC's way of updating how self-employed people and landlords report their income.

Here's the bit most people get wrong: it's not four or even five tax returns a year.

It's more like sending a text to HMRC every three months. "Here's what came in, here's what went out." That's it. No calculations, no payments, no panic. Just a running total from your records.

And to be clear — you don't pay tax quarterly. Not now, anyway. The quarterly update is just information. What you owe is still calculated once a year, and you still pay it by 31 January. Nobody is taking money from you every three months.

(There is talk of moving towards more regular tax payments for the self-employed from 2029 onwards — similar to how PAYE works for employees. But that's not here yet, and when it comes it will be a separate change with its own announcement.)

The actual tax return — the one where your accountant earns their fee, claims your reliefs and works out what you owe HMRC. Or, on a good year, what HMRC owes you — that still happens once a year. MTD doesn't replace that. It just means HMRC gets a rough picture every quarter instead of being surprised every January.

Put it this way: instead of letting the carrier bag fill up for a whole year, you're just giving HMRC a peek inside every three months. The bag stays manageable. You stay sane.

So does it actually apply to you?

It comes down to one number: your qualifying income.

Not your profit. Not what's left after fuel, materials and the van insurance. Your gross income — everything that came in from self-employment and property, before you spent any of it.

If you're a builder who turned over £55,000 last year — even if half went on materials — you're in. If you drive a van and also rent out a flat, both incomes count together.

On a PAYE job with your own invoices on the side? Only the self-employed bit counts for MTD. Your salary from the boss doesn't come into it.

What if I'm nowhere near those numbers?

Below £20,000 — you're automatically off the hook. Nothing to do.

Between £20,000 and the current threshold — you're not in yet, but you will be. Worth building the habit of keeping digital records now, because habits take months to build — not a weekend before a deadline.

Who's actually off the hook?

A few groups can apply for an exemption:

• People who genuinely cannot use computers or software — age, disability or no internet where they live
• Some religious groups where digital recordkeeping conflicts with their beliefs
• Cases where HMRC accepts it's not reasonably practicable

Think you might wriggle out of it? Check the exemptions guidance on GOV.UK — don't just assume. HMRC needs to agree.

Honestly?

MTD is a real change. You can't leave everything to January anymore. But it's not as bad as it sounds — mostly because the quarterly bit is just a summary, not a reckoning.

The hard part isn't the submission. It's keeping clean records through the year so the summary takes minutes, not a weekend.

For your specific situation — mixed income, multiple jobs, anything complicated — talk to your accountant. This covers the general rules. Not tax advice.

Sources

• Find out if and when you need to use MTD — GOV.UK
• Work out your qualifying income — GOV.UK
• Find out if you can get an exemption — GOV.UK

MTD from April 2027: does the £30,000 threshold apply to you?