If Making Tax Digital sounds like another tax rule to worry about, start here. This guide explains the basics in plain English, so you can understand what is changing before you make decisions about software, records or professional help.
Current GOV.UK/HMRC position: MTD for Income Tax is being phased in. The current thresholds are over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028, based on qualifying income for the relevant tax years. Rules can change, so always check the latest official GOV.UK/HMRC guidance.
For context, you may also want to read Tax Basics for UK Freelancers, Best Accounting Software for UK Freelancers and the Sole Trader Expenses Guide.
What Making Tax Digital for Income Tax means
Making Tax Digital for Income Tax, often shortened to MTD for Income Tax or MTD for ITSA, is HMRC’s move towards digital record keeping and more regular updates for certain people in Self Assessment. For freelancers, it mainly matters if you are a sole trader with self-employed income above the relevant threshold. Landlords can also be affected because property income counts within the MTD for Income Tax rules.
Under MTD, the idea is not simply to file one annual tax return in the old way. People within scope will need to keep digital records and use compatible software to send updates to HMRC. HMRC describes the system as a way to reduce errors and make tax records more up to date. For a freelancer, that means your admin may become more regular, with records kept throughout the year rather than rebuilt in January.
The important point is that MTD for Income Tax is being phased in. Not every UK freelancer is included immediately, and many side-hustlers will not be included straight away. Your start date depends on your qualifying income and your Self Assessment position.
The current phased thresholds
At the time of writing, HMRC says MTD for Income Tax starts in phases. If your qualifying income is over £50,000 for the 2024 to 2025 tax year, you need to use it from 6 April 2026. If your qualifying income is over £30,000 for the 2025 to 2026 tax year, you need to use it from 6 April 2027. If your qualifying income is over £20,000 for the 2026 to 2027 tax year, you need to use it from 6 April 2028.
Qualifying income is not the same as profit. For most freelancers, it is broadly the gross income from self-employment and property income that is relevant, before deducting expenses. This matters because someone with £55,000 of freelance income and £20,000 of expenses may still be above the £50,000 qualifying income threshold. If you are unsure what counts for you, check GOV.UK or speak to a qualified adviser.
Rules and guidance can change. Always check the latest GOV.UK/HMRC guidance before relying on a threshold, deadline or exemption.
What freelancers may need to do
If you are within scope, you should expect to keep digital records, choose HMRC-compatible software and send regular digital updates. You may also need to authorise the software to connect to HMRC. If you already use accounting software, the change may be less dramatic. If you currently keep a paper notebook or a basic spreadsheet, you may need to adjust how you keep records.
You do not need to panic-buy software today, but you should understand your position. Start by checking your income for the relevant tax years, making sure your invoices and expenses are recorded clearly, and reading the software guidance before the date applies to you. If you use an accountant, ask how they plan to handle MTD and what they need from you.
How this cluster can help
This Making Tax Digital cluster is designed to break the topic into smaller pieces. You can read about start dates, thresholds, software, side hustles, penalties, the difference between MTD and Self Assessment, and a practical checklist. For wider tax background, read the Tax Basics for UK Freelancers guide. For tools, read the Best Accounting Software for UK Freelancers page. For record keeping, the Sole Trader Expenses Guide is also useful.
The aim is to help you understand the language and prepare calmly. It is general information only, not tax advice for your personal circumstances.
FAQs
Is MTD for Income Tax already live for everyone?
No. It is being phased in from April 2026 based on qualifying income thresholds.
Does MTD replace Self Assessment?
Not completely. It changes how some people keep records and report information, but affected taxpayers still need to finalise their tax position for the year.
Will HMRC tell me if I need to join?
HMRC says it will review Self Assessment returns and write to people above the relevant threshold, but you are still responsible for checking whether and when you need to use MTD.
More Making Tax Digital guides
- When Does Making Tax Digital Start for Sole Traders?
- Making Tax Digital Income Thresholds Explained
- Best Making Tax Digital Software for Freelancers
- Do Side Hustles Need Making Tax Digital?
- Making Tax Digital Checklist for Freelancers
- Making Tax Digital vs Self Assessment
- Making Tax Digital Penalties: What Freelancers Should Know
Related freelancer money guides
- Tax Basics for UK Freelancers
- Best Accounting Software for UK Freelancers
- Sole Trader Expenses Guide
- Existing Making Tax Digital guide
Disclaimer: Freelance Wallet UK provides general information only. It is not financial, tax or legal advice. Always check official HMRC/GOV.UK guidance or speak to a qualified professional for your own situation.