Right, let’s cut through the noise on this one.
Making Tax Digital for Income Tax is coming whether we like it or not, and the thing that trips most people up is this: HMRC doesn’t care about your profit. They’re looking at your gross income. The top line. The money coming through the door before you’ve even spent a penny.
What counts as “gross income”?
Simple:
- Sole traders: it’s your turnover, before expenses
- Landlords: it’s your rental income, before expenses
- Got both? HMRC combines them
So if you’re pulling in £25k from self-employment and £10k from a rental property, your qualifying income is £35k.
When does Making Tax Digital for income tax apply to you?
Making Tax Digital for Income Tax is being rolled out in stages:
April 2026: if your gross income from 2024/25 was over £50,000, you’re in.
April 2027: threshold drops to £30,000. HMRC looks at your 2025/26 return.
April 2028: drops again to £20,000. Based on your 2026/27 return.
So it’s not all at once, but make no mistake, it’s coming for most of us eventually. More info here.
The bit people don’t realise but need to know
Once your income tips over the threshold in a qualifying year, you’re locked in for a minimum of three years. Your income can drop the very next year and you’re still in it. There’s no just quietly slipping back out again.
What does being “in it” actually mean?
In short:
- Digital bookkeeping (no more shoeboxes)
- Quarterly updates to HMRC
- Compatible software: mandatory, not optional
- Spreading the admin across the year instead of one annual nightmare
Honestly, done right, it’s not the horror show people make it out to be. But it does require you to actually keep on top of your records throughout the year rather than scrambling in January.
So if your books are a mess, now’s the time to sort it. Before HMRC sorts it for you.
Reading this and feeling stressed? We’re here to help. Drop us an email at hello@beyond-accounting.co.uk or contact us here.
