MTD Eligibility and Tax Reserve on £100,000 Turnover
Check Making Tax Digital eligibility on £100,000 turnover and calculate the tax reserve after £25,000 of expenses.
Direct answer: Qualifying turnover of £100,000 is above the £50,000 threshold for entry from April 2026, based on qualifying income reported for 2024/25. After £25,000 of expenses, calculated profit is £75,000 and the estimated Income Tax and Class 4 National Insurance reserve is £20,189, or £1,682 a month.
Assumptions: A sole trader in England, Wales or Northern Ireland; 2026/27 rates; one trade; no pension or student loan; all stated expenses are allowable. MTD eligibility uses qualifying gross income before expenses, while the reserve calculation uses profit after expenses.
Eligibility and reserve calculation
| Item | Calculated amount or result |
|---|---|
| Qualifying turnover | £100,000 |
| Allowable expenses | £25,000 |
| Taxable business profit before allowances | £75,000 |
| Income Tax | £17,432 |
| Class 4 National Insurance | £2,757 |
| Total annual reserve | £20,189 (26.9% of profit) |
Which number decides MTD eligibility?
The threshold test uses qualifying income, broadly gross self-employment and property income before expenses. It is not the same as taxable profit. In this scenario the threshold test therefore uses £100,000, not the £75,000 left after expenses.
The published threshold is income above £50,000 from April 2026, above £30,000 from April 2027, and above £20,000 from April 2028. HMRC uses qualifying income from the earlier return: 2024/25 for April 2026 entry, 2025/26 for April 2027, and 2026/27 for April 2028. A figure exactly at a threshold is not described here as above it.
Building the cash reserve
The reserve is calculated from profit because allowable expenses reduce taxable business income. Moving 26.9% of profit, approximately £1,682 for each average month in this scenario, into a separate account builds toward the £20,189 annual estimate.
- Record turnover before subtracting expenses for the eligibility check.
- Retain invoices and evidence for allowable expenses.
- Update the reserve when turnover or costs change.
- Allow separately for payments on account and any other taxable income.
Official reference and calculators
Check HMRC's MTD eligibility guidance. Recalculate the profit with the self-employed tax calculator and review payments on account. Estimates can differ where other income uses part of the Personal Allowance or tax bands.