SOLE TRADERS
MTD for sole traders
Work out whether your gross sole trader turnover, combined with any property income, puts you into an MTD Income Tax phase.
Your MTD verdict
Qualifying income
£55,000 / year
Checking live mandation date…
- Phase
- P1
- Income test
- Strictly over £50,000
- HMRC tests
- 2024/25 Self Assessment return
HMRC normally tests qualifying income using the previous tax year’s Self Assessment return.
What you must do
- Keep digital records
- Send 4 quarterly updates a year (deadlines 7 Aug, 7 Nov, 7 Feb, 7 May) via MTD-compatible software
- Submit a final declaration by 31 January after the tax year (replaces the Self Assessment tax return)
Key scope notes
- Qualifying income means combined GROSS income from self-employment (turnover) + property (rental), before expenses.
- Excluded: employment / PAYE wages, dividends, company director salary, company-held (incorporated) property income.
- Partnerships have a separate MTD timeline — not covered here.
- Jointly-owned property and multiple businesses can require additional review.
General information, not tax advice. Check GOV.UK / your accountant.
Free MTD readiness checklist
Get the four-page setup guide by email.
What to know
- Qualifying income uses gross self-employment turnover before expenses, combined with gross property income.
- Employment/PAYE wages, dividends and company director salary are excluded from this test.
- Partnerships have a separate MTD timeline and are outside this checker.
Key dates
| Phase | Qualifying income | From | Tested on |
|---|---|---|---|
| 1 | Over £50,000 | 6 April 2026 | 2024/25 return |
| 2 | Over £30,000 | 6 April 2027 | 2025/26 return |
| 3 | Over £20,000 | 6 April 2028 | 2026/27 return |
MTD for sole traders FAQs
Does MTD use profit or turnover?
The qualifying-income test uses gross self-employment turnover before expenses.
Do I add rental income?
Yes. Add gross property income to gross self-employment turnover.
Does PAYE income count?
No. Employment/PAYE wages are excluded.
When does HMRC test my income?
HMRC uses the relevant previous tax year’s Self Assessment return.
Are partnerships covered?
No. Partnerships have a separate timeline and are outside this version.
Related MTD guides
Sole traders · Landlords · Thresholds · Quarterly updates · Complete guide