Making Tax Digital for Income Tax business population statistics: commentary
Published 13 August 2025
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This publication is available at https://www.gov.uk/government/statistics/making-tax-digital-for-income-tax-business-population-statistics/making-tax-digital-for-income-tax-business-population-statistics-commentary
1. Overview
This publication produced by HM Revenue and Customs (HMRC) provides statistics on the business population that will be impacted by the introduction of Making Tax Digital (MTD) for Income Tax. The statistics are based on information held on Income Tax Self Assessment (ITSA) returns.
Sole traders and landlords will need to use MTD for Income Tax if they receive income from self employment or property, or both over a qualifying income threshold. Work out your qualifying income for Making Tax Digital for Income Tax - GOV.UK. Qualifying income is the total gross income in a tax year from self employment and property.
In this publication when we refer to an individual or business we mean someone who is an individual taxpayer within the charge to Income Tax Self Assessment who receives self-employment or property (UK or foreign) income.
This publication provides information for the 2023 to 2024 tax year including returns received up to 31 March 2025. The actual number of businesses impacted by the introduction of MTD for Income Tax in future will depend on the information for the relevant tax year.
Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. They will need to keep digital records and every quarter, submit simple summaries of their income and expenses to HMRC using compatible software. This is expected to reduce the tax gap by reducing the scope for error and failure to take reasonable care.
When businesses need to start using MTD for Income Tax depends on their qualifying income within a tax year. If their qualifying income is over:
- £50,000 for the 2024 to 2025 tax year, they will need to use it from 6 April 2026
- £30,000 for the 2025 to 2026 tax year, they will need to use it from 6 April 2027
- £20,000 for the 2026 to 2027 tax year, they will need to use it from 6 April 2028
Further background information on Making Tax Digital and the statistics in this release can be found in the background quality report.
2. Summary
There were 7.0 million individuals in Income Tax Self Assessment with landlord or self-employed sole trader businesses in tax year 2023 to 2024. Around 2.9 million (42%) of which have a qualifying income above £20,000 and will need to join MTD for Income Tax.
From April 2026 businesses with a qualifying income over £50,000 will need to join MTD. Based on tax year 2023 to 2024 there are 864,000 individuals with a qualifying income over £50,000.
Another 1,077,000 individuals with a qualifying income between £30,000 and £50,000 will need to join MTD in April 2027.
A further 975,000 with a qualifying income £20,000.01 to £30,000 will join MTD in April 2028.
This release includes information on whether customers have an authorised agent for their Self Assessment and whether they used software to submit their return to HMRC.
Authorised agent representation increases with a higher qualifying income. For those with over £50,000 qualifying income, 75% were represented by an authorised agent.
Individuals with a higher qualifying income are more likely to be already using software to submit their end of year Self Assessment return. For businesses with over £50,000 qualifying income 63% used software to submit their end of year return for 2023 to 2024.
Software use is much higher for those who have authorised agent representation. For businesses with an authorised agent and over £50,000 qualifying income, 78% used commercial software to submit the end of year return, compared to only 21% for those without an authorised agent.
3. Number of businesses by MTD qualifying income
Table 1 in the accompanying statistical tables shows the number of businesses by qualifying income by business type. Qualifying income sets the date that businesses need to join MTD for Income Tax. There were 7.0 million individuals in Income Tax Self Assessment with landlord or self-employment businesses in tax year 2023 to 2024. Around 2.9 million (42%) of businesses have a qualifying income above £20,000 and will need to join MTD for Income Tax.
| Qualifying Income | Total Self-Employed / Landlords |
|---|---|
| up to £10,000 | 2,429,000 |
| £10,000.01 to £20,000 | 1,674,000 |
| £20,000.01 to £30,000 | 975,000 |
| £30,000.01 to £50,000 | 1,077,000 |
| over £50,000 | 864,000 |
| Total | 7,020,000 |
Figure 1: Number of ITSA businesses by qualifying income
| Qualifying Income | Self-Employed only (not a Landlord) | Landlords only (not Self-Employed) | Self-Employed and a Landlord |
|---|---|---|---|
| up to £10,000 | 1,153,000 | 1,218,000 | 58,000 |
| £10,000.01 to £20,000 | 870,000 | 712,000 | 92,000 |
| £20,000.01 to £30,000 | 637,000 | 263,000 | 75,000 |
| £30,000.01 to £50,000 | 798,000 | 182,000 | 97,000 |
| over £50,000 | 605,000 | 118,000 | 141,000 |
In April 2026 businesses with a qualifying income over £50,000 will need to join MTD. Based on tax year 2023 to 2024 there are 864,000 individuals with a qualifying income over £50,000 of which 605,000 have only self-employment income, 118,000 have only landlord income and 141,000 have both landlord and sole trader income.
In April 2027 the qualifying income threshold will lower to £30,000. Based on tax year 2023 to 2024 there are 1,077,000 individuals with a qualifying income between £30,000.01 and £50,000 of which 798,000 have only self-employment income, 182,000 have only landlord income and 97,000 have both landlord and sole trader income.
In April 2028 the qualifying income threshold will lower further down to £20,000. Based on tax year 2023 to 2024 there are 975,000 individuals with a qualifying income between £20,000.01 and £30,000 of which 637,000 have only self-employment income, 263,000 have only landlord income and 75,000 have both landlord and sole trader income.
4. Agent representation
Table 2 in the accompanying statistical tables shows number of businesses by qualifying income with authorised agent representation. An authorised agent is where the individual has completed a 64-8 form authorising someone else to deal with HMRC on their behalf.
Figure 2: ITSA businesses with authorised agent representation
| Qualifying Income | Percent with agent representation |
|---|---|
| up to £10,000 | 51% |
| £10,000.01 to £20,000 | 54% |
| £20,000.01 to £30,000 | 59% |
| £30,000.01 to £50,000 | 63% |
| over £50,000 | 75% |
Authorised agent representation increases with a higher qualifying income. For those with over £50,000 qualifying income 75% were represented by an authorised agent. For the £30,000.01 and £50,000 qualifying income band, this reduces to 63% agent representation. For the £20,000.01 and £30,000 qualifying income band, 59% have agent representation.
5. Commercial software use
Table 3 in the accompanying statistical tables shows the number of businesses who use commercial software to submit the Self Assessment return. Commercial software is used to make an online end of year Self Assessment return. This does not necessarily mean that software has been used for record keeping or preparing the end of year return.
Figure 3: Numbers of businesses who use commercial software to submit the Self Assessment return
| Qualifying Income | Use software to submit their SA return | Do not use software to submit their SA return | Total |
|---|---|---|---|
| up to £10,000 | 1,091,000 | 1,338,000 | 2,429,000 |
| £10,000.01 to £20,000 | 756,000 | 918,000 | 1,674,000 |
| £20,000.01 to £30,000 | 469,000 | 505,000 | 974,000 |
| £30,000.01 to £50,000 | 532,000 | 545,000 | 1,077,000 |
| over £50,000 | 548,000 | 316,000 | 864,000 |
Around half of businesses used commercial software to submit their end of year return.
Individuals with a higher qualifying income are more likely to be already using software to submit their end of year Self Assessment return. When looking at the over £50,000 cohort, 548,000 (63%) of businesses used software to submit their return. For those with £30,000.01 to £50,000 qualifying income 532,000 (49%) used software, and for those with £20,000.01 to £30,000 qualifying income 469,000 (48%) used software.
Tables 4 and 5 in the accompanying statistical tables show the number of businesses with or without agent representation who use commercial software to submit the Self Assessment return.
Software use is much higher for those who have an authorised agent (73%). However, a higher qualifying income did not lead to higher software usage.
For businesses with an agent and over £50,000 qualifying income 78% used software to submit an end of year return compared to only 21% for those without an agent.
6. Contact details
For queries or feedback on this publication please email: B Skittrall or C Breeze personaltax.statistics@hmrc.gov.uk for mailbox. For media enquiries please contact: news.desk@hmrc.gov.uk