MTD ITSA - UK - 2026 rules - All guides
Making Tax Digital for Income Tax: Freelancers & Contractors
If you freelance or contract as a self-employed individual, Making Tax Digital for Income Tax changes how you report once your income crosses the threshold. Here is whether it applies to you and when.
MTD ITSA applies to freelancers and contractors who operate as sole traders when their gross self-employment income (combined with any UK property income) exceeds the threshold for their phase — over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028. Freelancers working through their own limited company are outside MTD ITSA.
Does it apply to you?
Most freelancers and contractors who invoice clients directly as sole traders fall under the same MTD ITSA rules as any other self-employed person. What decides your start date is your qualifying income — your gross fees and invoices before expenses. Over £50,000 means you start from 6 April 2026; over £30,000 from 6 April 2027; over £20,000 from 6 April 2028. Importantly, if you contract through your own limited company, your company income is not in MTD ITSA at all — limited companies will come under a separate Making Tax Digital for Corporation Tax regime in future, not ITSA.
The thresholds and dates
What counts toward your threshold
Your threshold is gross income — total invoiced fees before you deduct any costs, equipment, software or expenses. A freelancer billing £58,000 a year but with £15,000 of costs is still measured at £58,000 and is in scope from April 2026. Day-rate contractors near the £50,000 line should check carefully, because it is turnover, not take-home, that counts. Income inside the £1,000 trading allowance does not count, and any PAYE employment alongside your freelancing is excluded from the test.
What you will need to do
If you are mandated you keep digital records of your freelance income and expenses, use MTD-compatible software, and send HMRC four quarterly updates per tax year (the first 2026/27 deadline is 7 August 2026) plus a Final Declaration. This replaces your single annual Self Assessment return and applies regardless of how irregular your freelance income is across the year.
Common questions
I freelance through my own limited company — am I in MTD ITSA?
No. Limited company income is outside MTD ITSA. The income-tax regime applies to sole-trader self-employment and property income. Companies will eventually come under a separate Making Tax Digital for Corporation Tax, but that is not the same thing and has no confirmed date.
My freelance income varies a lot month to month — how does the threshold work?
The threshold is tested on your total gross income for the tax year, not month by month. HMRC assesses it from your previous Self Assessment return to decide whether you are mandated.
Is it my invoiced fees or my profit that counts?
Your gross invoiced fees — turnover before expenses. Your profit after costs does not determine whether you are in scope.
I freelance part-time alongside a job — does my salary count?
No. PAYE employment income is excluded. Only your gross self-employment (and any property) income is tested against the threshold.
What will change for me day to day?
Instead of one annual return you will keep digital records and submit four quarterly updates plus a Final Declaration. Using software that tracks the deadlines and stores records as you go makes this far less disruptive.
Never miss a quarterly MTD deadline
AdminShield tracks your MTD ITSA quarterly updates and Final Declaration, reminds you before each falls due, and keeps your records organised - built for UK freelancers & contractors and the accountants who support them.
Start free - no card requiredThis guide is general information about Making Tax Digital for Income Tax based on current HMRC rules and is not tax advice. Thresholds and dates may change; check your own circumstances with HMRC or a qualified accountant.