Frequently Asked Questions about MTD for Subcontractors

Making Tax Digital (MTD) for Income Tax is one of the biggest changes to the UK tax system for self-employed workers and landlords in recent years. If you're a CIS subcontractor, sole trader it's important to understand when the new rules will apply to you, whether you're exempt, and what steps you should take to prepare.

Who will need to use Making Tax Digital for Income Tax

You’ll need to use Making Tax Digital for Income Tax if all of the following apply:

• you’re a sole trader or a landlord registered for Self Assessment
• you get income from self-employment or property, or both
• your qualifying income is more than the relevant threshold for the tax year — read more about what qualifying income is and what is included

When you need to start using Making Tax Digital for Income Tax depends on your qualifying income within a tax year. If your qualifying income is over:

• £50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026
• £30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027
• £20,000 for the 2026 to 2027 tax year, you will need to use it from 6 April 2028

Who is exempt from Making Tax Digital for Income Tax

There are different reasons why you may be exempt from Making Tax Digital for Income Tax. For example, you could be exempt if you are digitally excluded.If you are exempt, you will not have to use Making Tax Digital for Income Tax but you must continue to report your income and gains in a Self Assessment tax return. You can find out if you can get an exemption from Making Tax Digital for Income Tax

Check if you need to use Making Tax Digital for Income Tax

Making Tax Digital for Income Tax will become mandatory in phases, starting from 6 April 2026.Use our tool to check:

• if you need to use the service
• when you need to start
• if you may be exempt

You can also use this tool on behalf of someone else. Before you startFor the tax years ending 5 April 2025, 5 April 2026 and 5 April 2027, you’ll need to consider:

• if you’ll need to send a Self Assessment tax return and which sources of income you’ll need to declare
• how much self-employed or property income you’ll receive in the tax year
  

What to do if you need to use the service

If you need to use Making Tax Digital for Income Tax, you should prepare and be signed up for the service before you need to use it. For example, you will need to choose and authorise your chosen software or decide how your agent will act for you, if you have one.You can find more information about what you need to do to prepare and sign up if:

• you’re a sole trader or landlord
• you’re an agent and want to sign up a client

What will happen before the start of the tax year

HMRC will review your Self Assessment tax return and check your qualifying income each tax year. If your income is above the relevant threshold HMRC will write to you, confirming that you need to start using Making Tax Digital for Income Tax by the start of the upcoming tax year. For example, if we review your return and find your qualifying income for the 2024 to 2025 tax year is over £50,000, we’ll write to you and confirm that you need to start using Making Tax Digital for Income Tax by 6 April 2026.If you do not receive a letter, it is still your responsibility to check if and when you need to use Making Tax Digital for Income Tax, and make sure you are signed up and prepared to use it when you need to.