| Overview |
MTD for Income Tax Self Assessment (MTD for ITSA) is being introduced in phases, with different mandation dates applying depending on the level of a client's qualifying income. This article sets out the confirmed and proposed timelines, what they mean for your clients, and how to use BrightTax to identify who is affected.
| ⚠ Important: The timelines in this article reflect HMRC's confirmed and proposed mandation dates as of May 2026. HMRC may update these dates. Always refer to gov.uk/making-tax-digital for the latest official information before advising clients. |
| Confirmed and Proposed Mandation Dates |
| Phase | Qualifying Income | Mandatory From | Status |
|---|---|---|---|
| Phase 1 | £50,000 or more | 6 April 2026 | Confirmed — mandatory now |
| Phase 2 | £30,000 or more | 6 April 2027 | Confirmed |
| Phase 3 | £20,000 or more | 6 April 2028 | Proposed — subject to confirmation |
| Below £20,000 | Below £20,000 | Not yet announced | Voluntary only |
| What Counts as Qualifying Income? |
Qualifying income for MTD for ITSA purposes is the combined gross income from:
- Self-employment (sole trader businesses)
- UK property income (rental income)
- Foreign property income
The following income types do not count towards the qualifying income threshold:
- PAYE employment income
- Dividends
- Savings and interest income
- Pension income
- Capital gains
| ✔ Tip: Qualifying income is assessed on gross income before expenses — not profit. A client with £55,000 gross self-employment income but £40,000 expenses (leaving a £15,000 profit) still has £55,000 qualifying income and is mandated from April 2026. |
| Which Tax Year Does the Threshold Apply To? |
The mandation threshold is assessed against the qualifying income in the tax year two years before the mandation year. For example:
| Mandation Year | Assessment Based On | Notes |
|---|---|---|
| April 2026 | 2023/24 qualifying income | Clients above £50k in 2023/24 are mandated |
| April 2027 | 2024/25 qualifying income | Clients above £30k in 2024/25 are mandated |
| April 2028 | 2025/26 qualifying income | Subject to confirmation |
| ⚠ Important: The assessment year used to determine mandation is subject to HMRC guidance and may differ for clients in specific circumstances. Always verify against the latest HMRC guidance for individual clients. |
| Voluntary Sign-Up |
Clients below the qualifying income threshold can voluntarily sign up for MTD for ITSA before they are mandated. Some clients may benefit from doing so earlier — for example, those who want to track their tax liability throughout the year or who already use MTD-compatible software.
| Using BrightTax to Identify Affected Clients |
The MTD Qualifying Income Report in BrightTax shows you each client's qualifying income, their mandation date, and any applicable exemption reason — all in one place.
- Go to Reports in the main navigation.
- Select MTD Qualifying Income.
- Filter by tax year and run the report.
- Review which clients are approaching or have reached their mandation threshold.
See Running the MTD Qualifying Income Report in BrightTax for full guidance.
| Frequently Asked Questions |
Q: My client was above the threshold last year but expects to be below it this year — are they still mandated?
A: Once mandated, a client remains within MTD for ITSA unless they formally apply to HMRC to exit the scheme. Dropping below the threshold in a subsequent year does not automatically remove the obligation. HMRC guidance on cessation applies.
Q: Does the threshold apply to each income source separately or combined?
A: Combined. A client with £25,000 self-employment income and £10,000 rental income has £35,000 qualifying income — above the April 2027 threshold.
Q: What happens if a client is mandated but does not sign up for MTD?
A: HMRC will issue penalties for failure to comply with MTD obligations once a client is mandated. Clients should be signed up and compliant from their mandation date.
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