Your Income Dropped Below the MTD Threshold — Can You Stop Using MTD?

Your income has fallen below the Making Tax Digital threshold. Does that mean you can immediately stop keeping digital records and sending quarterly updates? Not necessarily. HMRC looks at your qualifying income and when the change happened. If your income falls below the relevant threshold after the tax year has already started, you generally remain within MTD for that tax year. If you are already using MTD, you can continue voluntarily or may be able to opt out under specific conditions.

One particularly important rule is that, after you have started using MTD, falling below the threshold for three consecutive tax years can allow you to opt out. The thresholds are also changing: MTD applies from 2026–27 to people whose qualifying income for 2024–25 was over £50,000, the threshold falls to £30,000 for the 2025–26 qualifying year and to £20,000 for 2026–27.

So if your income has dropped, don’t simply stop sending quarterly updates. First check which threshold applies to you, when your income changed and whether you are actually eligible to opt out. A lower income can change your MTD position — but the timing matters just as much as the amount.