Combine day-rate contracts, fixed-fee projects, and monthly retainers into one gross total.
If you work as a self-employed UX or product designer, freelancing for startups, agencies, or direct clients as a sole trader, Making Tax Digital applies to you the same way it applies to any other self-employed person. Freelance design work is often billed as a mix of day rates, fixed-fee projects, and ongoing retainers, which is worth understanding for your MTD figures.
Yes, if your gross freelance design income, plus any other self-employment 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 received before expenses, software subscriptions and other costs are deducted afterwards, not before, when checking your threshold.
Many designers combine one-off project work with an ongoing monthly retainer for an existing client. Under the cash basis, which most self-employed designers use, retainer income is recognised as each month is invoiced, not as a single lump sum when the retainer agreement is first signed. A 12-month retainer worth £2,000 a month adds £2,000 to your income each month it's billed, spread across the tax year, not £24,000 all at once.
| Expense Category | Examples |
|---|---|
| Software | Figma, Adobe Creative Cloud, prototyping and research tools |
| Equipment | Design hardware such as a laptop or tablet, via capital allowances |
| Portfolio and marketing | Portfolio website hosting and design |
| Professional development | Courses and conferences relevant to your practice |
| Use of home / office | Simplified flat rate, or a proportion of costs if you rent studio space |
Theo's £59,000 combined income exceeds the £50,000 Phase 1 threshold. His retainer income is counted as each month is invoiced across the year, not as one lump sum when the agreement started.
As each billing period is invoiced, not as one lump sum when the retainer agreement is signed. A monthly retainer adds to your income each month it's billed, spread across the tax year.
The same as any self-employed sole trader: over £50,000 gross income 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, not for MTD purposes. Company profits are taxed under Corporation Tax and dividend rules, which sit outside MTD for Income Tax's current scope, that only reaches sole trader and property income.
Yes, software subscriptions genuinely used for your design work, along with hardware, portfolio hosting, and relevant professional development, are all standard allowable expenses.
Any HMRC-recognised MTD software works. The main practical need is recording retainer income by billing period rather than as one upfront figure, which most freelance invoicing software handles well.
Our free calculator checks your exact threshold, deadlines, and recommends the easiest software for your record-keeping.
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