The headline rule for MTD ITSA in April 2026 is well known: sole traders and landlords with combined qualifying income above £50,000 are mandated. The reality of working out which of your specific clients falls into scope is messier than the headline suggests, because "combined qualifying income" has a precise meaning that does not match how most clients (or even some firms) think about their income.
This is a client-type-by-client-type guide to who is in, who is out, and which edge cases need a closer look before the April 2026 start date.
Sole traders: the straightforward case
A sole trader with self-employment gross income above £50,000 in the relevant tax year is mandated from 6 April 2026. "Gross" matters - it is turnover before deduction of expenses, not net profit. A trader with £80,000 turnover and £45,000 of expenses (£35,000 net profit) is in scope. A trader with £40,000 turnover and £5,000 of expenses (£35,000 net profit) is not in scope on self-employment alone.
The relevant tax year for the April 2026 mandation is 2024-25 - the most recent tax year for which the Self Assessment return was due by 31 January 2026. HMRC uses this as the baseline determination.
Landlords: include all property types
Property income for the qualifying income test includes UK property letting, furnished holiday lettings (until the FHL regime was abolished), and overseas property letting. Aggregate the gross rents from all properties, before expenses. A landlord with one £40,000 UK property and one £15,000 overseas property has £55,000 of qualifying property income and is in scope.
Joint ownership: each joint owner is assessed on their share of the gross rental income, not the total. A married couple jointly owning a portfolio generating £80,000 gross are each treated as having £40,000 - under the £50,000 threshold individually, even though the combined household figure is well over. This is the most commonly missed point in client segmentation exercises.
Combined sole-trader-and-landlord clients
Where a client has both self-employment and property income, both are aggregated for the threshold test. A taxpayer with £30,000 self-employment and £25,000 property income has £55,000 of combined qualifying income and is in scope, even though neither stream alone would qualify.
For these clients, the MTD obligation covers both income streams. Quarterly updates must be filed for the self-employment trade and for the property business - practically often handled as separate sets of updates within the same software, but logically distinct under MTD rules.
Income that does not count toward the threshold
Several common income categories are excluded from the qualifying income calculation:
- Employment income (PAYE)
- Pension income (state, occupational, personal)
- Bank and building society interest
- Dividend income (UK or overseas)
- Trust income received by beneficiaries
- Most foreign income other than property and self-employment
- Capital gains
Out of scope and deferred
Several taxpayer categories that do file Self Assessment are out of scope for MTD ITSA, at least initially. Partners and members of partnerships are deferred - the partnership MTD regime has not yet been launched, and individual partners are not pulled into MTD on their partnership share until that happens. Trustees and personal representatives of estates are out of scope. Ministers of religion, examiners, and a handful of other specialist categories have specific exclusions.
Digital exclusion is a recognised category. Taxpayers who cannot use MTD because of age, disability, location (no reliable internet), or religious objection can apply for an exemption. HMRC reviews each application individually and grants exemptions sparingly - do not assume the application will succeed without specific grounds.
The edge case clients who need a closer look
Several client patterns deserve manual review rather than threshold-based automation. The client who oscillated around the threshold over the last three years: which baseline year applies? The client whose 2024-25 income was unusually high due to one-off project work: is the mandation grounded in genuine sustained income? The client who restructured from sole trader to limited company mid-year: does the residual sole trade qualify? The client who started self-employment mid-2024-25: is the part-year figure annualised or taken as filed?
For each, the safer practical approach is to assume mandation and plan for it. The cost of preparing for MTD on a client who turns out not to need it is modest. The cost of discovering in July 2026 that a client you assumed was out of scope is in fact mandated, with no records and no software, is significant.
Building the segmentation list
Pull a list of every individual client filing Self Assessment, with three columns: self-employment gross income from the most recent return, property gross income from the most recent return, and the sum. Sort by the sum. Everyone above £50,000 is in scope for April 2026. Everyone between £30,000 and £50,000 is in scope for April 2027. Everyone between £20,000 and £30,000 is in scope for April 2028.
Surface this list in the practice management system rather than keeping it in a spreadsheet that goes stale. Accupe handles it as a client status field: every Self Assessment client has an MTD ITSA status (mandated 2026, mandated 2027, mandated 2028, out of scope, exemption pending) that drives the work the team needs to do on that client. The actual MTD filings, when they begin, happen in whatever recognised software the client uses.
Closing
Scope is determined by gross qualifying income, joint ownership splits per owner, and the relevant baseline year. Build the segmentation list now, classify every Self Assessment client into one of the four mandation cohorts, and revisit the edge cases manually. The April 2026 start date does not move - your readiness is the variable you control.