MTD for sole traders and side hustles: the £20,000 question

Making Tax Digital is usually discussed as a landlord problem — but the same rules capture sole traders: freelancers, tradespeople, consultants, delivery riders, Etsy and eBay sellers, and anyone else with self-employment income on their tax return. As the threshold falls to £20,000 in April 2028, MTD stops being a "big business" issue and reaches almost every serious side hustle in the UK.

The number that matters: qualifying income

Your qualifying income is your combined gross income from self-employment plus property, before any expenses. Three traps hide in that definition:

• It's turnover, not profit. A freelancer invoicing £24,000 with £6,000 of costs has £24,000 of qualifying income — over the 2028 line.
• Income streams combine. £14,000 from a trade plus £8,000 of rent = £22,000. Neither alone would qualify; together they do.
• Employment doesn't count. Your PAYE salary is ignored — MTD looks only at the self-employed and property side.

The timeline for the self-employed

What changes day-to-day

Instead of one January tax return, you keep digital records of every business income and expense, and send HMRC a summary four times a year through software, with a final declaration at year end (deadlines in our quarterly deadlines guide). Each trade and each property business reports separately — a plumber who also lets a flat sends updates for both.

Mixed income: where it gets messy

The £20k-£30k band is full of people with two or three small income streams — some freelance work, a lodger, a rental inherited from family. That mix is exactly what spreadsheets handle worst and what MTD software must handle well: separating trades from property, applying the right expense categories to each, and (for landlords) treating mortgage interest correctly under Section 24.

What to do now

• Add up last year's gross self-employment + property income. Over £20,000? You have a date with MTD by 2028 at the latest.
• Start keeping digital records a year early — your first mandatory quarter becomes a non-event instead of a scramble.
• Check whether you genuinely qualify for an exemption — most people don't.