{"id":27096,"date":"2026-04-17T15:44:53","date_gmt":"2026-04-17T15:44:53","guid":{"rendered":"https:\/\/www.moorethompson.co.uk\/blogs\/?p=27096"},"modified":"2026-04-28T09:12:17","modified_gmt":"2026-04-28T09:12:17","slug":"if-my-income-drops-will-i-still-need-to-manage-making-tax-digital-obligations","status":"publish","type":"post","link":"https:\/\/www.moorethompson.co.uk\/blogs\/if-my-income-drops-will-i-still-need-to-manage-making-tax-digital-obligations\/","title":{"rendered":"If my income drops, will I still need to manage Making Tax Digital obligations?\u00a0"},"content":{"rendered":"\n

By Craig Reid, Partner<\/em> <\/p>\n\n\n\n

Making Tax Digital (MTD) for Income Tax is now mandatory for sole traders, self-employed individuals and landlords with a qualifying income over \u00a350,000. <\/p>\n\n\n\n\n\n\n\n

However, if you are looking at your current financial situation and have realised that your income has fallen below that amount, you might be tempted to ignore MTD for the time being.  <\/p>\n\n\n\n

This can result in noncompliance if you incorrectly absolve yourself of MTD, so it is worth understanding how and when MTD obligations can be removed.  <\/p>\n\n\n\n

When is someone no longer impacted by MTD?<\/strong> <\/h3>\n\n\n\n

It might be tempting to think that if your income drops or is frozen entirely for a period of time, MTD no longer applies to you.  <\/p>\n\n\n\n

However, the obligations for MTD date back as far as the 2024\/2025 tax year. <\/p>\n\n\n\n

This means that if you had a qualifying income over \u00a350,000 in that year, you will need to carry on following MTD rules from 2026\/27, even if that income is now below the threshold.  <\/p>\n\n\n\n

Maternity leave is cited as the most common reason why a person may be in a position of heavily reduced income but have the expectation of restoring it in the near future.  <\/p>\n\n\n\n

To be fully MTD exempt, you need to demonstrate to HMRC that you will not be receiving a qualifying income going forward.  <\/p>\n\n\n\n

For landlords, this will likely be when property is sold, while sole traders and self-employed individuals will need to show that they no longer do the work they once did.  <\/p>\n\n\n\n

If you are in scope for MTD but are suffering a temporary setback in your income generation, you will need to stay compliant for three years. <\/p>\n\n\n\n

Only if your income falls below the threshold for three consecutive years will you be able to stop following MTD rules. <\/p>\n\n\n\n

This is further complicated by the fact that the thresholds themselves are falling, first to \u00a330,000 for the 2025\/26 tax year, which would start MTD in April 2027 and then to \u00a320,000 for the 2026\/27 tax year, which would start MTD in April 2028.  <\/p>\n\n\n\n

How do I stay MTD compliant?<\/strong> <\/h3>\n\n\n\n

If you are not able to make yourself exempt from MTD, then the new obligations will continue to apply to you.  <\/p>\n\n\n\n

This means adopting digital record keeping, submitting quarterly filings and submitting an annual return. <\/p>\n\n\n\n

It may be frustrating that these rules continue to apply even if your income is nil. <\/p>\n\n\n\n

However, the main aim of MTD is to streamline the tax process and allow for more consistent monitoring of your financial position throughout the year.  <\/p>\n\n\n\n

Our team can help you manage your MTD obligations, regardless of what is going on in your life. <\/p>\n\n\n\n

If you are on maternity leave or your business is struggling, we can help support your engagement with MTD so that you do not find yourself drawing the ire of HMRC. <\/p>\n\n\n\n

Get in touch<\/strong><\/a> to ensure that you are fully MTD compliant, no matter your personal circumstances. <\/strong> <\/p>\n","protected":false},"excerpt":{"rendered":"

By Craig Reid, Partner  Making Tax Digital (MTD) for Income Tax is now mandatory for sole traders, self-employed individuals and landlords with … If my income drops, will I still need to manage Making Tax Digital obligations?\u00a0<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[26,135,31,35,3],"tags":[],"class_list":["post-27096","post","type-post","status-publish","format-standard","hentry","category-blog","category-craig-reid","category-hmrc","category-making-tax-digital","category-tax"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/posts\/27096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/comments?post=27096"}],"version-history":[{"count":1,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/posts\/27096\/revisions"}],"predecessor-version":[{"id":27097,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/posts\/27096\/revisions\/27097"}],"wp:attachment":[{"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/media?parent=27096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/categories?post=27096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.moorethompson.co.uk\/blogs\/wp-json\/wp\/v2\/tags?post=27096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}