Making Tax Digital for Income Tax: What UK Freelancers Need to Know

Making Tax Digital for Income Tax is now live. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC, instead of filing one Self Assessment return a year and forgetting about it until January.

If you freelance in the UK, this is the biggest change to how you report your income in years. It is also widely misunderstood, and the misunderstanding is expensive.

The trap: it is turnover, not profit

This is the single most important thing on this page.

HMRC's threshold is based on qualifying income, which is defined as your total income from self-employment and property before expenses. In HMRC's own words, "this is the amount before expenses (also known as turnover)."

So a freelancer who invoices £58,000 and claims £14,000 of expenses has a taxable profit of £44,000 — comfortably under £50,000 — and is still caught by MTD, because turnover is what counts.

If you have been reading "over £50,000" and mentally checking it against your profit figure, check again against your invoiced total.

What counts towards the £50,000

Counts:

• Self-employment income
• UK property rental income
• Foreign property income, if you are UK tax resident
• Your share of jointly owned property

Does not count:

• Employment income taxed through PAYE
• Your share of partnership profits, as an individual partner
• Dividends
• State Pension and private pensions
• Income covered by qualifying care relief

That first exclusion matters for anyone going freelance part-time. If you earn £35,000 in a salaried job and £20,000 freelancing, your qualifying income is £20,000, not £55,000.

Which year HMRC looks at

HMRC decides whether you are in scope using the Self Assessment return you submitted in the previous tax year. For the obligation starting April 2026, that means your 2024–25 return.

Two consequences worth sitting with:

1. It is already decided. Whether you are in scope from April 2026 was determined by a return you filed months ago. Trading more quietly this year does not get you out of it.
2. Do not wait to be told. HMRC says you should check your own qualifying income rather than relying on receiving a letter. Letters go astray, and the obligation does not.

What you actually have to do

Three things change:

Keep digital records. Spreadsheets kept by hand no longer satisfy the requirement on their own. Income and expenses must be recorded digitally in software that can talk to HMRC.

Send quarterly updates. Four times a year you submit a summary of income and expenses for the period, rather than a single annual reckoning.

Finalise at year end. The quarterly updates are not tax returns — they are running totals. A final declaration at the end of the year confirms the position and is where reliefs and adjustments land.

The quarterly updates do not mean paying tax four times a year. Payment dates are unchanged; it is the reporting rhythm that changes.

What this means in practice

If you are already using accounting software that is MTD-compatible, most of this is a settings change and a habit change.

If you have been running on a spreadsheet and a shoebox, this is the forcing function. The practical work is not the quarterly submission itself — it is that you can no longer leave twelve months of bookkeeping until January. Records have to be current enough to report every three months.

That is genuinely a good thing for most freelancers, and it is also the part people underestimate.

If you are under the threshold

You are not required to join yet. You can sign up voluntarily, and there is an argument for doing so if you expect to cross £50,000 soon — moving over in a quiet year is easier than moving over in a busy one.

Further thresholds below £50,000 have been announced in outline. Check the current position on GOV.UK rather than relying on a number you half-remember, because the timetable has moved before.

Where to check

The definitive source is GOV.UK's Making Tax Digital for Income Tax guidance, and the detail on the threshold is in work out your qualifying income.

This page is a plain-English summary, not tax advice. If your situation is complicated — multiple income sources, property alongside freelancing, a partnership, or a year where turnover is close to the line — that is worth an hour of an accountant's time rather than a guess.

Related reading

• Managing Your Freelance Finances and Taxes — the wider picture on freelance tax
• The Ultimate Checklist for a Freelance Startup — setting up properly from the start
• What To Do When A UK Client Doesn't Pay — because turnover only counts once it arrives