Does Making Tax Digital affect getting a mortgage?

Making Tax Digital (MTD) has changed how some self-employed people report their income and expenses to HMRC. But if you’re planning to apply for a mortgage, there’s an obvious question: does it also change the way lenders assess your income?

The short answer is no — Making Tax Digital doesn’t, by itself, change the rules for getting a mortgage.

Lenders still decide how they’ll assess self-employed income and what evidence they’ll accept. However, MTD does change the records you keep and the way you report them to HMRC, so it’s understandable to wonder what happens to documents such as SA302s — or whether your new quarterly figures could be used for a mortgage.

Here’s what you need to know.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is HMRC’s new way for eligible sole traders and landlords to report their income and expenses.

Instead of keeping records separately and reporting everything at the end of the year, people within MTD must use compatible software to keep digital records of their business or property income and expenses.

The software is also used to send HMRC quarterly updates and, at the end of the year, complete and submit the relevant tax return.

Importantly, those quarterly updates don’t replace your annual tax return. HMRC says quarterly updates are summaries of your digital records rather than tax returns, and you don’t need to make all of your accounting or tax adjustments before sending them.

Who has to use Making Tax Digital?

MTD for Income Tax is being introduced in stages. Under HMRC’s Making Tax Digital rules, the rollout depends on your qualifying income in an earlier tax year:

Qualifying income	When MTD applies
More than £50,000 in 2024/25	From 6 April 2026
More than £30,000 in 2025/26	From 6 April 2027
More than £20,000 in 2026/27	From 6 April 2028

“Qualifying income” doesn’t mean the same thing as the income a mortgage lender might use when assessing your application. For MTD, HMRC defines it as your total income from self-employment and property before expenses — essentially your turnover from those sources.

For example, a sole trader with £60,000 of turnover and £25,000 of allowable business expenses could be above the MTD threshold even though their business profit is substantially lower.

There’s also a particularly relevant change happening now. From September 2026, HMRC is automatically signing up some people who should already be using MTD but haven’t signed themselves up. HMRC says this applies where its records show qualifying income above £50,000 for 2024/25, with the process happening in stages over the following months.

Does Making Tax Digital change how lenders assess self-employed income?

Making Tax Digital changes how you report information to HMRC. It hasn’t introduced a new industry-wide calculation that mortgage lenders must use for self-employed applicants.

Mortgage lenders do, however, have regulatory requirements around affordability and income evidence. Under the FCA’s responsible lending rules, lenders taking income into account must obtain evidence adequate to support that income rather than relying on self-certification.

The FCA also recognises that the evidence required can vary according to factors such as whether someone is employed, self-employed or a contractor. Its guidance even notes that, for a self-employed customer, a lender may wish to consider projections of future income where they’re supported by a credible business plan.

In practice, lenders can still take different approaches to areas such as:

• how many years of income they consider
• whether they average income across multiple years
• how they deal with increasing or falling profits
• the figures they use for sole traders or company directors
• what they accept as evidence of income

This is why understanding how mortgage lenders calculate self-employed income can sometimes matter just as much as the figure shown on your latest tax return.

Can lenders use your quarterly MTD figures for a mortgage?

Having more up-to-date financial information might sound particularly useful if your business has grown significantly since your last completed tax return.

But you shouldn’t assume that a lender will calculate your mortgage affordability from your latest quarterly MTD update.

HMRC describes quarterly MTD updates as summaries of the income and expense records held in your software. You don’t need to make all of the accounting or tax adjustments that might eventually apply before sending them.

That means a quarterly update isn’t the same thing as a completed annual tax return or final tax calculation.

For example, suppose your last completed tax year showed £35,000 of self-employed income, but your business has since grown considerably and your current records suggest you’re heading for a much stronger year.

Your newer records could provide useful context around how your business is performing, but you shouldn’t assume that every lender will use those figures as the basis of affordability. The lender will still need to decide what income it can evidence and reasonably take into account.

Your latest tax return doesn’t always tell the whole story, which is one reason how lenders assess self-employed earnings can make such a difference when income is rising or fluctuating.

Will Making Tax Digital replace SA302s?

As things stand, Making Tax Digital hasn’t made SA302s obsolete.

As of September 2026, HMRC still specifically says SA302 tax calculations can be used as evidence of earnings and gives applying for a mortgage while self-employed as an example of when you might be asked for one.

HMRC currently allows you to obtain evidence for the previous four tax years, along with tax year overviews. Where commercial software is used, the tax calculation may have a different name, such as a “tax computation”.

MTD users also still complete a year-end tax return. HMRC’s MTD guidance says that, once the relevant adjustments and other income have been added, you’ll use your compatible software to check the tax calculation and submit the return.

So if you’ve moved onto Making Tax Digital, don’t assume the quarterly reporting process has replaced the year-end income evidence traditionally used for mortgages.

Our guide to what an SA302 is and why mortgage lenders ask for it explains how SA302s and tax calculations work in more detail.

What mortgage documents will you still need under MTD?

Making Tax Digital doesn’t mean there’s now a single set of documents every self-employed applicant needs.

Depending on your business structure, lender and circumstances, you could still be asked for evidence such as:

• SA302s or tax calculations
• tax year overviews
• business accounts
• personal or business bank statements
• evidence relating to your trading history
• additional information where your recent income has changed significantly

The exact requirements can vary. HMRC itself advises mortgage applicants to check what their provider will accept when obtaining SA302 and tax year overview evidence.

We’ve covered the most common requirements separately in our guide to the documents you need for a self-employed mortgage.

What if my MTD figures are higher than my last tax return?

This could become one of the more interesting mortgage questions created by MTD.

Imagine your last completed tax year reflects a relatively modest year, but your business has since expanded. Your digital records and quarterly updates now show significantly stronger performance.

That doesn’t automatically mean a lender will assess your mortgage using the newer figures.

The FCA’s guidance makes clear that income evidence can vary according to the applicant’s employment status and circumstances, and that lenders may consider future-income projections for a self-employed customer where they’re supported by a credible business plan. That doesn’t mean every lender will do so, or that an MTD quarterly update will be sufficient evidence on its own.

This is where lender choice can become important.

If your income has changed significantly, our guide to self-employed mortgage borrowing and how much you could get explains how income and lender criteria can affect your potential borrowing.

Does Making Tax Digital affect limited company directors?

Not simply because you’re a company director.

The current MTD for Income Tax rules focus on qualifying self-employment and property income.

HMRC says employment income, individual partnership profits and dividends don’t count towards MTD qualifying income. That includes dividends paid by your own limited company.

So if all of your income comes from your role as a director and shareholder of a limited company, that income doesn’t by itself put you over the MTD for Income Tax threshold.

You could still become subject to MTD if you separately receive sufficient qualifying income from another sole trade or from property.

Mortgage lenders also tend to assess company directors differently from sole traders. Depending on the lender, salary and dividends may be considered, while some lenders can take other business figures into account.

You can find out more in our limited company director mortgage income guide.

How to prepare for a mortgage if you’re using Making Tax Digital

If you’re thinking about applying for a mortgage, MTD itself shouldn’t be a reason to worry. But clear, up-to-date records can make it easier to understand and evidence your financial position.

A few sensible steps include:

• Keep your digital business records accurate and up to date.
• Make sure you can access your latest completed tax calculations and accounts.
• Don’t assume your quarterly MTD updates will automatically replace the documents a lender normally requests.
• If your income has risen or fluctuated, check how lenders may assess it before submitting an application.
• Avoid choosing a lender purely on the advertised rate if your self-employed income needs more careful assessment.

If you want an initial indication of affordability, our self-employed mortgage calculator can give you a rough estimate of how much you might be able to borrow.

Getting a mortgage when you’re affected by Making Tax Digital

Making Tax Digital has changed tax reporting for many sole traders and landlords, but it hasn’t created a new set of mortgage rules.

The bigger issue is still how the lender assesses your self-employed income.

If your latest completed tax return doesn’t accurately reflect how your business is performing now, different lenders may take different approaches to the evidence available and the income they’re prepared to use.

Your latest tax return doesn’t always tell the whole story. If your income has changed since your last completed tax year, we can look at your circumstances and help identify lenders whose approach may be better suited to your business and income history.

Find out more about getting a self-employed mortgage and how lenders could assess your application.