Include any margin you keep on furniture or materials sourced for clients, not just your design or consultation fee.
If you run a self-employed interior design business, whether purely on a design fee basis or also sourcing furniture and materials for clients, Making Tax Digital applies to you the same way it applies to any sole trader. There's one point specific to this industry that genuinely catches designers out: how sourcing markups are treated for tax purposes.
Yes, if your gross design business income, plus any other self-employment or rental income, exceeds the relevant threshold:
| Tax Year Assessed | Threshold | MTD Start Date |
|---|---|---|
| 2024–25 | Over £50,000 | 6 April 2026. Live since April 2026 |
| 2025–26 | Over £30,000 | 6 April 2027 |
| 2026–27 | Over £20,000 | 6 April 2028 |
Your gross income is your total fees and retained margin before expenses, software subscriptions, travel and sample costs are all deducted afterwards, not before, when checking your threshold.
Practically, this means your MTD qualifying income includes:
If you invoice a client for the exact trade price you paid, with no markup at all, and simply add your separate design fee on top, that pass-through amount is not your income, it's the client's own money moving through your business account on its way to a supplier. The distinction that matters is whether you retain any margin, not whether goods were involved in the transaction at all.
| Expense Category | Examples |
|---|---|
| Design software | SketchUp, AutoCAD, rendering and mood board tools |
| Sample library | Fabric swatches, material samples, showroom account fees |
| Travel | Mileage to site visits and supplier showrooms, at the current HMRC rate |
| Professional membership | BIID or other professional body membership fees |
| Marketing | Portfolio website, photography of completed projects |
Freya's £62,000 of trade purchases passed straight through to suppliers isn't her income, but the £18,000 margin she kept is. Combined with her £34,000 in design fees, her true qualifying income is £52,000, above the £50,000 Phase 1 threshold, even though her design fees alone would have kept her under it.
Yes. If you buy at trade price and sell to the client at a higher price, keeping the difference, that margin is your taxable trading income, in the same way a retailer's markup on stock is treated. It counts towards your MTD threshold alongside your design fees.
The same as any self-employed sole trader: over £50,000 gross qualifying income (design fees plus any retained markup) in 2024–25 means MTD from April 2026, over £30,000 in 2025–26 means April 2027, over £20,000 in 2026–27 means April 2028.
No, if there's genuinely no margin retained, that amount is simply the client's own money passing through your account to a supplier, and it doesn't count as your trading income.
For your own bookkeeping, it's worth tracking design fees and retained markup separately so you understand your actual margins, but for MTD purposes they're simply combined into one gross total against the threshold.
No, not for MTD purposes. Company profits are taxed under Corporation Tax and dividend rules, which currently sit outside MTD for Income Tax, that only reaches sole trader and property income.
Any HMRC-recognised MTD software works. The main practical need is separating true pass-through costs from retained markup, which is a straightforward categorisation task in any standard software.
Our free calculator checks your exact threshold, deadlines, and recommends the easiest software for your record-keeping.
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