Making Tax Digital (MTD) for Income Tax is now live, and thousands of self-employed people and landlords are asking the same question: “Do I actually need to register?”
With the new points-based penalty system already in effect, getting this wrong could mean unexpected fines. But here’s the confusion—not everyone has to sign up yet. Whether you need to register depends entirely on your annual income, and HMRC is rolling out the requirements in stages.
So, before you panic about software, digital records, or quarterly updates, let’s answer the most important question first: Is your income above the current MTD threshold?
The Short Answer
It depends on how much you earn.
MTD for Income Tax is being rolled out in stages based on your annual turnover (gross income before expenses). You only need to register when your income reaches the threshold for your tax year.
HMRC’s Official Registration Schedule
| If your qualifying income was… | You must start from… | Action required by… |
|---|---|---|
| More than £50,000 (Tax year 2024-25) | 6 April 2026 | Sign up immediately |
| More than £30,000 (Tax year 2025-26) | 6 April 2027 | Prepare to sign up |
| More than £20,000 (Tax year 2026-27) | 6 April 2028 | Prepare to sign up |
What is “Qualifying Income”?
This is the total turnover from your self-employment and property rentals before you deduct any expenses, salaries, or allowances.
Example: You earn £60,000 in sales but pay £20,000 in costs (net profit £40,000). Your qualifying income is £60,000. You must register.
If you earn under £20,000: You are currently exempt and do not need to register.
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How to Register for MTD (If You Need To)
If your income is above the relevant threshold, follow these steps:
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Get MTD-compatible software – Examples include Xero, QuickBooks, FreeAgent, or Sage. You cannot use a simple spreadsheet unless it’s MTD-enabled.
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Keep digital records – You must store your income and expenses digitally (photos of receipts are acceptable).
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Sign up via your HMRC online account – HMRC does not automatically enrol you. You must sign up yourself.
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Start submitting quarterly updates – Once registered, you’ll need to send HMRC a summary of your income and expenses every three months.
What If You Don’t Register When Required?
If you should have registered but didn’t, you may face:
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Penalty points under the new MTD points system
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£200 financial penalties once you reach the points threshold
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Late filing penalties for missed quarterly updates
Ignoring MTD requirements won’t make them go away. If you’re unsure whether you need to register, check your qualifying income for the last complete tax year.
