Quick answer
It depends on how you’re paid. Freelancers working as sole traders are in MTD if their turnover is over the threshold. Contractors paid through an umbrella company are employees, and contractors working through their own limited company aren’t in MTD for Income Tax: salary and dividends from your own company don’t count.
Key facts
Sole trader freelancers: turnover counts towards MTD
Umbrella company: you’re an employee, so it doesn’t count
Your own limited company: not in MTD for Income Tax
Dividends from your own company are excluded from qualifying income
Three ways of working
How you work | Counts for MTD? | Why |
|---|---|---|
Sole trader | Yes | Your invoices are self-employment turnover |
Umbrella company | No | You’re paid as an employee through PAYE |
Your own limited company | No | Salary is employment income and dividends are excluded |
Sole trader freelancers
Designers, developers, writers, consultants and other freelancers who invoice in their own name are self-employed. Your total invoiced income, before expenses, counts towards the threshold.
Start date | Qualifying income over | Based on your tax return for |
|---|---|---|
6 April 2026 | £50,000 | 2024/25 |
6 April 2027 | £30,000 | 2025/26 |
6 April 2028 | £20,000 | 2026/27 |
Limited company contractors
HMRC’s qualifying income guidance specifically excludes dividends, including from your own company. The company has its own tax obligations, but they’re not part of MTD for Income Tax. If you also let property, that rent still counts. See MTD and limited companies.
Mixed work
If you contract through a limited company and also do some freelance work in your own name, only the sole trader income and any rental income count towards your threshold.
Use the MTD checker to see your own start date.