Are you in? It’s your takings, not your profit
Add up everything clients paid you in the 2025/26 tax year – project fees, retainers, day rates, Fiverr or Upwork payments (before fees), print and merchandise sales, and licence fees or royalties from work you produce as part of your business – before taking off software or anything else. If that total (plus any rent from property you let) is over £30,000, MTD applies from 6 April 2027. Over £50,000 and you have been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| A client pays 50% upfront for a rebrand | Turnover – recorded when received (cash basis) | Record it when it is paid, even if the work isn’t finished yet. |
| Fiverr or Upwork releases your payment after taking its cut | Gross income + an expense (platform fees) | Record the full order value as income and the fee separately as an expense. |
| A publisher pays you a royalty on a book you illustrated | Turnover (royalties from your trade) | Record the gross royalty shown on the statement. |
| Your Adobe Creative Cloud subscription renews | Allowable expense – software | Keep the emailed invoice. |
| You buy a font licence or stock images for a client job | Allowable expense – direct costs | Keep the licence receipt and note which job it was for. |
| You buy a new drawing tablet | Equipment – deductible in the year you buy it (cash basis) | Keep the receipt and photograph it into your app. |
| You pay yourself by moving money to your personal account | Drawings – not an expense | Fine to do, but it does not reduce your tax. |
| Every three months | Quarterly update | Your software sends HMRC your income and expense totals. |
| After 5 April | Final declaration | Confirm the year’s figures; tax is worked out and due by 31 January. |
What can a graphic designer claim?
✓ Usually allowable
- Design and writing software (Adobe, Figma, Affinity, grammar and SEO tools)
- Computers, drawing tablets, monitors and printers (business share)
- Font licences, stock photos and mock-up templates
- Art materials, printing and sample costs
- Freelance platform fees and payment processing charges
- Portfolio website, hosting and domain costs
- Professional indemnity insurance
- Professional body memberships relevant to your work
- Courses that update skills you already use
- Home office costs – the flat rate or a fair share of bills
✗ Not allowable
- Software or kit you mainly use for personal projects
- Books, films and exhibitions you enjoy for general inspiration
- Coffee shop drinks while you work
- A course to retrain in a completely new career
- Money you take out for yourself (drawings)
Rules that matter for graphic designers
Platform payments: record the gross amount
Fiverr, Upwork and similar sites pay you after taking their fee. MTD turnover is the full amount the client paid, so record that as income and the fee as an expense. Your profit is the same either way, but the gross figure decides whether MTD applies.
Royalties and licence fees
If illustrating or writing is your business, royalties and licence fees for that work are normally part of your trading income and count towards the MTD threshold. Keep every royalty statement – they often arrive only once or twice a year.
Upfront payments and retainers
Under the cash basis, a 50% deposit or a monthly retainer counts when you receive it. If you refund a client, record the refund when it goes out.
Worked example
Megan, a freelance brand designer in Glasgow (illustrative example)
| Takings (turnover) | £34,800 |
| less Software subscriptions | −£1,150 |
| less Laptop and drawing tablet | −£2,100 |
| less Fonts, stock images and printing | −£950 |
| less Platform and payment fees | −£1,400 |
| less Website, insurance and memberships | −£620 |
| less Use of home (flat rate) | −£312 |
| Profit | £28,268 |
| Income tax (estimate) | £3,140 |
| Class 4 National Insurance (estimate) | £942 |
| Total tax for the year | £4,081 |
| Put aside each month | £340 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for a freelance designer: tick off each client payment against your invoices, download your platform earnings report, and add the software and stock-image receipts from your inbox. Note any royalty statements that arrived. Then submit from your software, or let your accountant do it. Done monthly, it is a 20-minute job.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Sole trader, one business.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £30–£60about £360–£720 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £60–£120about £720–£1,440 a year |
What pushes the price up: lots of transactions every month, or more than one income stream; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your business are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions graphic designers ask
My income is all over the place. Does MTD mean paying tax every quarter?
No. Quarterly updates are just a summary of your figures. You still pay tax on 31 January and, if you make payments on account, 31 July.
Do book royalties count towards the MTD threshold?
If illustrating or writing is your trade, royalties from that work are normally trading income and count. If it is a one-off unrelated to any business, it may be treated differently – check with an accountant.
Can I claim my Adobe subscription?
Yes, if you use it for client work. If you also use it for personal projects, claim the business share.
I’m employed as a designer and freelance in the evenings. Am I affected?
Your salary does not count. Your freelance takings do – if they (plus any rental income) go over the MTD threshold, MTD applies.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.