MTD Threshold: Why £50,000 Matters
The single most misunderstood aspect of MTD is the £50,000 threshold. Many sole traders assume it refers to profit — what you take home after expenses. It does not. It is your gross income — total turnover before any deductions.
Gross Income vs Profit
A graphic designer billing £55,000 per year with £15,000 in expenses has a profit of £40,000. But their gross income is £55,000, which puts them above the MTD threshold.
This catches many sole traders off guard. If your business has significant expenses, your profit may be well below £50,000 while your turnover exceeds it.
How to Check Your Figure
Look at your most recent Self Assessment tax return:
- Self-employment: Box 15 on the self-employment pages — this is your turnover
- Property income: Box 20 on the property pages — this is your total rents
- Combined: Add them together
If the total exceeds £50,000, you must comply with MTD from April 2026.
What Happens at £30,000?
From April 2027, the threshold drops to £30,000. If you are between £30,000 and £50,000, you have one more year to prepare — but starting early is strongly recommended.
Near the Threshold?
If your income fluctuates around £50,000, HMRC uses the figures from your most recent tax return. If you were above £50,000 last year but expect to be below this year, you are still required to comply based on the historical figure.
Accounted helps you track your income in real time so you always know where you stand.
MTD is coming. Accounted is already compliant. Start free and be ready before the deadline.
Tax & Compliance Specialists
Our tax specialists have decades of combined experience in UK sole trader and small business taxation, MTD compliance, and HMRC submissions. All content is reviewed against current HMRC guidance before publication and updated quarterly to reflect legislative changes.
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