If you drive through an agency, only your self-employed income counts towards the Making Tax Digital threshold. Wages paid through PAYE don't count, and that's true whether the agency pays you directly or you're employed by an umbrella company. So a driver who's on PAYE for all their agency work isn't in MTD for that work, however many shifts they do. If you're a mix, it's the self-employed part that HMRC adds up, plus any rent you get from a property.
How do I know if I'm employed or self-employed?
Look at what you get at the end of the week.
If it's a payslip with tax and National Insurance already taken off, you're being paid as an employee. That might be PAYE through the agency itself, or through an umbrella company, which employs you and runs your wages through its own payroll. Either way it's employment income, and MTD doesn't count it.
If you send an invoice, get paid the full amount with nothing taken off, and put the money on the self-employment pages of your tax return, that's self-employed work. And for MTD the figure that matters is your turnover before expenses. Not what's left after diesel, insurance and the van lease. The whole lot that came in.
The payslip and the invoice are a good starting point, but they don't settle your legal status on their own. What your contract says and how the work actually runs both matter. If you're not sure, HMRC has a free tool called Check employment status for tax that walks you through the questions.
Why a day rate can still mean PAYE
Plenty of drivers assume a day rate makes them self-employed. It doesn't, on its own. Under the agency rules, if someone tells you how to do the job (the route, the drop order, the depot procedures, the tracker on the cab) the agency usually has to run your pay through PAYE. HMRC's own example of this in its Employment Status Manual is an HGV driver. It compares a driver who decides how to get the load delivered with one whose route and working day are set and checked by someone else.
That doesn't mean every agency driver is the same. Two drivers at the same yard can be paid two different ways. Go by your own paperwork.
What if I'm a mix?
Keep the two apart. Add up your self-employed turnover and any rental income. Leave the PAYE and umbrella wages out of that sum.
Here's an example. Say you earn £24,000 through an umbrella company in the week and £18,000 doing self-employed multi-drop work at weekends. Your qualifying income is £18,000, not £42,000. That's under the £30,000 line for April 2027. But it's close to the £20,000 line that comes in from April 2028, so if the weekend work grows by a couple of thousand you'll be in. These are made-up figures to show the sum, not anyone's real position.
HMRC decides using your tax return from two years before. Over £30,000 on the 2025/26 return means MTD from 6 April 2027. Over £20,000 on the 2026/27 return means MTD from 6 April 2028. We wrote about why that makes it worth filing your 2025/26 return early.
Your PAYE wages don't disappear either. If you file a tax return, they still go on it, and under MTD they go on the final declaration at the end of the year. They just don't count when HMRC works out whether you're in.
If you drive through your own limited company, this doesn't apply in the same way. Salary and dividends from your own company aren't qualifying income for MTD.
If you've got a drawer of agency payslips and a few invoices and you can't tell which pile is which, tell us how you're paid and roughly how much comes in each way. Alex or Anca will tell you whether MTD looks likely and when. There's more on how we work with drivers, and on the Making Tax Digital page, or you can get in touch.
Sources: HMRC, Work out your qualifying income for Making Tax Digital for Income Tax, Find out if and when you need to use Making Tax Digital for Income Tax, Working through an umbrella company, Check employment status for tax and Employment Status Manual ESM2059. Correct as at November 2026.