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Making Tax Digital (MTD) for Income Tax Eligibility Checker

Making Tax Digital for Income Tax (MTD-IT) becomes mandatory in stages from April 2026. The threshold drops to £30,000 in 2027, then £20,000 in 2028. This checker tells you whether you're mandated this tax year, when you'll cross the threshold, and what compliance actually involves.

Last verified: 25 April 2026 Source: GOV.UK MTD for Income Tax guidance Next review: 25 October 2026
Inputs
GROSS turnover before any expenses — sales/fees/royalties, not profit. This is the most-confused detail in MTD coverage.
Rental income from UK property, gross before expenses or mortgage interest. Adds to qualifying income for MTD threshold purposes.
Threshold drops in stages. Check each year to see when you'll first be mandated.
Your qualifying income —
Threshold for this year —
Status —
When you'll be mandated —
Quarterly update obligations —
Software requirements —
Etsy/Vinted side-hustler — £35k gross self-employment, checking 2026/27
Self-employment £35,000 gross · No property income · Tax year 2026/27

Not mandated for 2026/27. Your £35,000 gross self-employment income is under the £50,000 first-year threshold. You can stay on annual Self Assessment for 2026/27. But — when the threshold drops to £30,000 in 2027/28, you’ll be mandated. Worth picking compatible software in advance.

Same person checking 2027/28
Self-employment £35,000 gross · No property income · Tax year 2027/28

Mandated from 2027/28. £35,000 exceeds the £30,000 second-year threshold. You’ll be required to keep digital records, use MTD-compatible software, and submit five updates per tax year (four quarterly + one final declaration).

Small Vinted reseller — £18k gross, checking 2028/29
Self-employment £18,000 gross · No property · Tax year 2028/29

Not mandated even at the £20,000 threshold. £18,000 is under £20,000 — annual Self Assessment continues. The threshold doesn’t currently drop further; if your income stays below £20,000, MTD remains voluntary indefinitely under the rules announced so far.

Mixed income — £25k SE + £15k rental, 2026/27
Self-employment £25,000 + property £15,000 · Tax year 2026/27

Combined qualifying income £40,000 — under the £50,000 first-year threshold. Both income types count together for MTD purposes; you’re not mandated in 2026/27. But £40,000 exceeds the £30,000 threshold for 2027/28, so you’ll be mandated next year. Plan ahead.

Full-time freelancer — £75k self-employment, 2026/27
Self-employment £75,000 · No property · Tax year 2026/27

Mandated from year one (2026/27). £75,000 is well above the £50,000 first-year threshold. You’re required to keep digital records using MTD-compatible software and submit quarterly updates: 5 August 2026, 5 November 2026, 5 February 2027, 5 May 2027, plus the final declaration by 31 January 2028.

Making Tax Digital for Income Tax (MTD-IT) is HMRC’s biggest Self Assessment shake-up since the 1990s. The headline change: from April 2026, qualifying self-employed people and landlords must keep digital records, use compatible software, and submit five updates per tax year instead of one. The threshold is being phased in — £50,000 initially, dropping to £30,000 in 2027 and £20,000 in 2028.

This page exists because most coverage of MTD-IT gets two things wrong:

  1. It conflates gross income with profit. The £50k/£30k/£20k thresholds are gross qualifying income (sales/turnover), not profit. A £35k Etsy seller with £20k of legitimate business expenses still has £35k of qualifying income for MTD purposes — they’re mandated as soon as the threshold drops below their gross level. Thinking in profit terms can leave you blindsided.

  2. It treats £50,000 as a permanent threshold. It’s not. £50,000 is the first-year threshold for 2026/27 only. Then £30,000 from April 2027, £20,000 from April 2028. Every year more sellers get caught. The phased rollout is designed to ease HMRC’s processing burden, not your planning.

The calculator above checks both — your status this year and when the threshold drops will catch you.

What “qualifying income” includes

For MTD-IT thresholds, qualifying income = self-employment + UK property/rental income (gross). What’s included:

  • Sales from Etsy, eBay, Vinted, Depop, Shopify, Amazon, etc.
  • AdSense / YouTube partner programme income
  • Patreon, OnlyFans, Substack, Ko-fi
  • Streaming royalties (DistroKid, TuneCore, CD Baby payouts)
  • Tutoring, coaching, freelance services
  • Rental income from UK property (gross before expenses)

What’s not included:

  • PAYE employment income
  • Dividend income
  • Savings/interest income
  • Pension income
  • Income from limited company directorship (different rules — out of scope here)

So a Vinted reseller doing £25,000 of gross sales while earning £45,000 PAYE has qualifying income of £25,000 — under the £30,000 2027 threshold but over the £20,000 2028 threshold. MTD will apply to the Vinted side from April 2028.

What MTD compliance actually involves

If you’re mandated, three things change:

1. Digital records mandatory. Every income and expense item must be in software (or in a spreadsheet linked via bridging software). Receipts can be paper, but the data must be digital. Pure paper bookkeeping is non-compliant.

2. Quarterly updates. Five submissions per tax year instead of one. Quarter-end deadlines are 5 August, 5 November, 5 February and 5 May (covering the four quarters of the standard tax year). Each is a summary of income and expenses for that quarter — not a full Self Assessment return.

3. Final declaration by 31 January. This replaces the existing Self Assessment return. You confirm your full-year figures, claim allowances, and submit. Functionally similar to the current return, but signed off after four quarterly updates rather than computed from scratch.

The five-deadline system is the most-disliked part of MTD for self-employed people. Many sellers hand quarterly updates off to a bookkeeper or accountant; others use software that auto-generates them from bank feeds.

Software requirements

HMRC publishes a recognised software list. As of April 2026 it includes:

  • Free options for simple cases (rental-only, single-platform Etsy)
  • Subscription products from £4-£30/month (FreeAgent, QuickBooks, Xero, Sage variants)
  • Spreadsheet + bridging combinations (cheaper but more setup)

The link in the source above is HMRC’s full list. Don’t choose software based purely on price — accountant integration, multi-platform reconciliation, and ease of use matter more than £5/month.

What’s not changing

A lot. Your tax bands, personal allowance, trading allowance (£1,000), Class 4 NI, payment deadlines (31 January for the previous tax year, payments on account 31 January and 31 July) — all unchanged. MTD changes how you submit data, not what you owe. The side hustle tax calculator and trading allowance calculator work the same way before and after MTD applies to you.

The HMRC platform reporting rules (Vinted/Etsy/eBay sharing your data above £1,700/30 items) are also separate from MTD-IT. Both apply, but they’re independent obligations.

Common mistakes
  • Confusing GROSS qualifying income with NET profit. MTD-IT uses gross income (turnover), not profit after expenses. £30,000 of Etsy sales with £15,000 of expenses (net £15,000 profit) still has £30,000 of qualifying income — so you’ll be mandated in 2027/28 even though your taxable profit is below the £20,000 threshold. This is the single most-confused detail in MTD coverage.
  • Assuming the £50,000 threshold stays put. It doesn’t. £50,000 is only the first-year threshold (2026/27). It drops to £30,000 from April 2027, and £20,000 from April 2028. A £35k seller is fine in 2026/27 but mandated from 2027/28.
  • Forgetting that property income counts. MTD-IT applies to combined self-employment + property/rental income. £25k Etsy + £25k rental = £50k qualifying — over the £30k 2027 threshold. Even pure landlords with rental income above the threshold are mandated.
  • Believing ‘I’m just on PAYE’ makes you exempt. PAYE employment income doesn’t trigger MTD. But if you have a side hustle pushing your self-employment income above the threshold, MTD applies to the self-employment portion regardless of how much PAYE you also have. £40k PAYE + £35k Etsy = mandated in 2027/28.
  • Assuming ‘compatible software’ means free or simple. It can be — HMRC publishes a list of recognised products including some free options for low-volume sellers. But many products are subscription-based (£4-£30/month). Spreadsheets work only if linked to bridging software. Pure paper records are non-compliant.
  • Confusing MTD for Income Tax with MTD for VAT. Different rules, different timelines. MTD for VAT was already mandatory for VAT-registered businesses (since 2019/2022). MTD for IT is the new income-tax-side rollout being phased in from April 2026. They run in parallel for VAT-registered self-employed people.
What this calculator doesn't cover
  • Doesn’t model partnerships, trusts, or limited companies — these have separate MTD timelines and different qualifying-income definitions.
  • Doesn’t model exemptions: HMRC allows opt-out for digitally excluded users (no internet access, religious objection, age/disability barriers). The opt-out process requires a formal application.
  • Doesn’t track which specific MTD-compatible software is best for your needs. The HMRC software list is at the source URL — over 100 products. Choice depends on your bookkeeping style, volume, accountant integration, and price tolerance.
  • Doesn’t model the cost of MTD compliance — software fees, accountant time, learning curve. Realistically, expect £100-£500/year of software + setup costs for typical small-business users.
  • Doesn’t capture HMRC’s Income Record Viewer mechanics or the Self Assessment-to-MTD migration process. HMRC has detailed guidance for this transition.
  • Schedule based on rules announced as of April 2026. Future Chancellors could amend timing or thresholds — though significant changes seem unlikely given the rollout has already started.

Frequently asked questions

Is the threshold gross income or profit?

Gross, not profit. £30,000 of Etsy sales counts as £30,000 of qualifying income even if your expenses (Etsy fees, materials, postage) reduce profit to £15,000. This catches a lot of side-hustlers who assume ‘I only made £15k profit’ means they’re under the £20k threshold. The trading allowance is separate and doesn’t apply to MTD threshold calculation.

I'm on PAYE plus a side hustle. Does MTD apply to my whole income?

MTD applies to your self-employment income only, but the threshold is checked against self-employment + property income (not PAYE). £40k PAYE + £35k Etsy: PAYE continues normally; Etsy crosses the £30k 2027 threshold so the Etsy side moves to MTD quarterly reporting from 2027/28. PAYE doesn’t trigger or affect MTD.

Why does the threshold keep dropping?

HMRC’s strategy is to phase in mandation rather than mass-mandate everyone at once, giving smaller businesses time to adapt. The first wave (£50k+) is large but manageable; the £30k and £20k waves catch more sellers but with the rollout pattern already proven. Below £20k stays voluntary indefinitely under current plans.

What does 'quarterly updates' actually mean?

Five submissions per tax year instead of one. Four quarterly updates summarising income and expenses for each three-month period (deadlines 5 Aug, 5 Nov, 5 Feb, 5 May after each quarter ends), plus a final declaration by 31 January confirming your full-year figures. Quarterly updates are summary numbers from your digital records — not full Self Assessment returns.

Can I still use a spreadsheet?

Only if linked to ‘bridging software’ that submits the data to HMRC’s MTD API. Pure spreadsheets without API connection are non-compliant. The HMRC software list specifies which spreadsheet+bridging combinations are recognised. Many sellers find dedicated bookkeeping software simpler than maintaining a spreadsheet plus a bridge.

What if I don't have internet access or have other barriers?

HMRC offers exemption for ‘digitally excluded’ users — religious grounds, disability, age, or genuine internet access difficulties. Requires a formal application via your HMRC account; not automatic. The vast majority of sellers won’t qualify; this is for genuine accessibility cases.

How much does MTD compliance actually cost?

Realistically £100-£500/year for typical small-business sellers. Software £4-£30/month (£50-£360/year). Setup and learning curve adds time-cost. Some sellers use a bookkeeper or accountant who handles MTD — that’s £200-£1000+/year depending on volume and complexity. There are some genuinely free options for very simple cases (pure rental, single-platform Etsy) on HMRC’s recognised software list.

Can I opt in voluntarily before I'm mandated?

Yes. Voluntary sign-up is open below the threshold. Reasons to opt in early: smoother transition when mandation hits, better real-time visibility of tax liability, avoid the year-end Self Assessment crunch, easier accountant engagement. Reasons to wait: software cost during years when not required, learning curve when not yet forced. Most accountants advise waiting until mandated unless your accountant strongly recommends otherwise for your specific situation.

About this calculator. Maintained by Jordan — a UK seller and creator who actually uses these platforms (Etsy, eBay, Vinted, DistroKid). Built to be accurate, mobile-fast, and honest about its limits. Spot a bug? Email hello@payoutmath.co.uk.