Change of Circumstances: Do I Need to Comply with MTD for IT?
9th March 2026
Tax payers who are mandated into MTD for IT are those who submitted a Self Assessment Tax Return for the year 2024/25 with total qualifying income from sole trade or property in excess of £50,000.
There are cases where these income levels may have dropped below the £50,000 threshold or ceased completely. Here are some examples of these scenarios, and the results of how this aligns with MTD for IT starting from 6th April 2026.
My qualifying income from my sole trade or property has now fallen below £50,000
If your qualifying income has fallen below £50,000 it does not mean that you fall straight out of MTD for IT requirement. HMRC have stated that income must be below the threshold for the next 3 tax years after the threshold is breached (2024/25 currently).
This means that if you have fallen below in 2025/26, you would still have to comply with MTD for IT up to 2028/29.
It is important however to bear in mind that the thresholds for qualifying income are falling to £30,000 for the 2025/26 tax year, and £20,000 for the 2026/27 tax year so unless qualifying income has fallen below £20,000 for the next three consecutive tax years, you will continue to be required to submit quarterly MTD or IT submissions and it is so far unclear what HMRC will do with the thresholds after this point.
I have incorporated my business and now operate as a Ltd company
As the sole trade business has ceased, it will not be mandatory to comply with MTD for IT as there is no qualifying income within the next tax year. HMRC will need to be informed that your sole trade activities have stopped.
My qualifying income from my sole trade or property has ceased
If income from a sole trade or property has completely ceased, say on 31st March 2025, there is no qualifying income from 2025/26 income so you will no longer need to comply with MTD for IT.
In the scenario that you have a sole trade business and a rental property where your combined qualifying income for 2024/25 was over £50,000 and your sole trade ceased on 31st March 2025, you will still be mandated into MTD as the ceased income still made up part of the qualifying income for that year. You would have to be MTD for IT compliant until 3 consecutive tax years passed where qualifying income fell under the threshold.
Please note that this is the same for if you have two sources of sole trade income, just because one ceases does not mean that you can step out of MTD requirements. The ceased sole trade income in 2024/25 still counts towards your qualifying income, so the remaining sole trade business will still need to comply with MTD until 3 consecutive tax years qualifying income fall under the threshold.
What if I don’t need to comply with MTD
If you no longer believe that you need to comply with MTD for IT from 6th April 2026, please speak to your Whitings LLP contact who can give you clarity on your situation.
HMRC will need to be contacted to inform them that the circumstances have changed following any complete cessation of qualifying income.
Get In Touch
There are many other circumstances that could arise, so please speak to your Whitings LLP contact or your local Whitings LLP office for more information.
Disclaimer - All information in this post was correct at time of writing.
