Making Tax Digital threshold: £50k, £30k, £20k explained

The £50,000 figure looks simple. It catches more people out than any other rule in MTD.

Most of the people we speak to either assume MTD does not apply to them (because their profit is below £50,000) or assume it does (because their turnover is above it). Both assumptions are often wrong. The threshold uses turnover, not profit, but it is also tested per person, not per couple, which catches a lot of jointly-owned property out.

This article is the threshold-only deep dive. It covers what the threshold actually is, how it is tested, what counts and what does not, how joint ownership changes the maths, and what to do if you are near the line. For the broader MTD framework and the dates that go with each threshold launch, the Making Tax Digital 2026 overview is the place to start.

What the threshold actually is

The MTD threshold is your total turnover from self-employment plus rents from property, before you take off any expenses. The figure HMRC uses is the one on your most recent Self Assessment return.

Three things matter in that sentence:

Gross. Total receipts, not profit. £80,000 of invoiced work less £30,000 of costs is £80,000 of gross income, not £50,000 of net income.
Combined. Self-employment plus property added together. £30,000 from a sole trade plus £25,000 of property rents is £55,000 combined.
Most recent Self Assessment return. HMRC tests your prior year. For the April 2026 cohort, that is the 2024-25 return filed by 31 January 2026.

If you cleared the threshold for that prior year, you are in scope from the relevant April. The threshold is not optional; if you are over, you must comply.

The three thresholds

MTD ITSA rolls out in three waves.

From	Threshold	Cohort
6 April 2026	£50,000+ gross combined income	First cohort, mandated now
6 April 2027	£30,000+	Second cohort
6 April 2028	£20,000+	Third cohort

The £30k cohort is the largest of the three, because more sole traders and landlords sit between £30,000 and £50,000 of gross income than above it.

What counts as income for the threshold

The threshold counts:

Self-employment income (sole trader, freelancer, sub-contractor)
Partnership share of trading income
Property income (UK and overseas, residential and commercial)
Furnished holiday let income (the FHL regime ended 5 April 2025; income is now treated as ordinary property income)

The threshold does not count:

Employment income (PAYE)
Pension income
Dividends
Interest
Capital gains
Foreign income that is not from self-employment or property

A consultant earning £40,000 of self-employed fees plus £30,000 from a part-time PAYE role has £40,000 of MTD-relevant income, not £70,000. The PAYE element is irrelevant to the threshold.

A landlord with £45,000 of rents and £20,000 of dividends has £45,000 of MTD-relevant income. Dividends do not count.

Joint property splits

Joint property ownership changes the answer materially.

Married couples and civil partners holding property in joint names are split 50:50 by default for tax purposes, regardless of the actual ownership percentages on the title deed. To split differently, both spouses must own different shares and elect using Form 17.

So a married couple with one BTL producing £52,000 of gross rent, held in joint names with no Form 17 election, are split £26,000 each. Each is then tested individually against the threshold. Neither is in MTD ITSA in 2026. Both are in scope from April 2027, once the threshold drops to £30,000.

Unmarried joint owners (siblings, business partners, parent and child, unmarried couples) split according to actual beneficial ownership. The tax position follows the legal position.

For the joint-property mechanics in detail, see MTD for landlords: complete guide.

Edge cases that catch people out

Just over the threshold

There is no soft margin. £50,001 of gross combined income brings you in. £49,999 does not. The threshold is hard.

Fluctuating year on year

If your income is volatile, you can be in one year and out the next. The test is each year’s prior-year return. A sole trader at £55,000 in 2024-25 is in the April 2026 cohort. If their 2025-26 income drops to £45,000, they are still in MTD for 2026-27, because the test was already passed. They can apply to leave only after three consecutive years below the threshold while still inside MTD.

Mid-year start of self-employment

If you started self-employed during 2025-26 and have no 2024-25 return showing self-employment income, HMRC has no prior data to test. You are not automatically in the April 2026 cohort. You may join later, once HMRC has a return showing income above the threshold.

Both self-employment and property

The two are added for the threshold test. £30,000 of self-employment plus £25,000 of property is £55,000 combined, and over the £50k threshold.

Multiple trades

A consultant who also runs an Etsy side business has two trades for HMRC purposes. The threshold combines them into one self-employment figure.

Income that lands in two tax years

A milestone payment paid in late March that crosses the tax year end can shift the threshold test by a few thousand pounds. If you are near the line, the timing of cash receipts matters.

Limited company income

If your business trades as a limited company, the company’s income is not in the MTD ITSA threshold test. You are personally taxed on whatever salary or dividends the company pays you, and dividends do not count toward the MTD ITSA threshold. Limited companies are not in MTD ITSA at all, as our guide to MTD for limited companies explains.

CIS sub-contractors

Gross income before CIS deduction is the figure that matters. A joiner with £80,000 of CIS-deducted invoices, and £64,000 actually received in the bank, is at £80,000 gross. They are firmly in scope.

Furnished holiday lets

The FHL regime ended on 5 April 2025. Income from former FHLs is now ordinary property income and counts toward the MTD threshold along with all other rents.

Foreign property

UK and overseas property are separate property businesses for tax purposes, but they combine for the threshold test. £25,000 of UK rents plus £30,000 of Spanish rents is £55,000 of property income.

What to do if you are near the threshold

Three positions matter.

Clearly above (over £55k for 2026, over £35k for 2027). You are in. The work is to set up software, sign up for MTD, and prepare to submit on time.

Clearly below (under £40k for 2026, under £25k for 2027). You are not in this cohort. The work is to keep an eye on the next year’s threshold; if your income is rising, you may be in the 2027 or 2028 cohort.

Within £5k of the threshold either way. This is the awkward zone. The current year matters disproportionately, because it determines whether the next year tests you in or out. If you are sitting at, say, £48,000 of forecast income, a single late invoice paid by 5 April rather than delayed to 6 April can decide whether you are in MTD the following year.

That is not a recommendation to manipulate the threshold. We do not advise that. But it is a reason to know your numbers in March and April, rather than discovering them after the fact.

Frequently asked questions

Is the MTD threshold based on income or profit? Income. Specifically, gross combined income from self-employment and property, before any expenses.

My income for last year was £49,000. Am I in the April 2026 cohort? No. You are below the £50,000 threshold and not in this wave. You may be in the April 2027 cohort if your 2025-26 income exceeds £30,000.

My business made a loss last year. Am I in MTD? The threshold test is on gross income, not profit, so a loss-making business with high turnover can still be in scope. £80,000 of turnover and £90,000 of costs is still £80,000 of gross income for the threshold.

Does dividend income count? No. The threshold only includes self-employment and property income.

I have one BTL producing £52,000 in joint names with my spouse. Are we in MTD? Not in 2026. The default 50:50 split for married couples in joint names puts each spouse at £26,000, below the £50k threshold. You will both be in from April 2027.

Does my spouse’s income affect my threshold? No, the test is per individual. Each person is tested against their own gross income from self-employment and property.

What if I am just above the threshold one year but expect to drop below in future years? You are still in MTD once tested in. You can apply to leave only after three consecutive years below the threshold while still complying with MTD ITSA.

Is the £20k threshold definitely going ahead in April 2028? It is the published position. Earlier thresholds have slipped before (the £30k threshold was originally scheduled ahead of where it now sits and was deferred), so there is some risk of slippage, but plan as if it goes live as published.

Talk to us about your threshold position

We work with sole traders and landlords across Northern Ireland, and we will tell you exactly which cohort you are in, when you must comply, and what to set up. See our Making Tax Digital service for what that involves. The first conversation is free.