Key takeaways

  • Qualifying income for Making Tax Digital is your total self-employment and property income before expenses, taken from the previous year's Self Assessment return.
  • You must use MTD for Income Tax from 6 April 2027 if your qualifying income on your 2025-26 return is over £30,000.
  • PAYE salary, the State Pension, private pensions, dividends, savings interest and partnership profit shares do not count towards qualifying income.
  • Joint landlords count only their own share of the property income, so a £50,000 rent split equally gives each owner £25,000.
  • A property you sold still counts if you have another continuing source, such as a sole trade.
  • HMRC doubles a sole trader's income if they traded for only six months, but landlords must annualise short-period property income themselves.
  • Non-UK residents count only UK property income and self-employment income declared on their UK return.

Qualifying income is the figure HMRC uses to decide whether you must use Making Tax Digital (MTD) for Income Tax. It is your total self-employment and property income before expenses, taken from the Self Assessment return for the previous tax year. If your 2025-26 figure is over £30,000, you join on 6 April 2027.

What is qualifying income?

Qualifying income is gross turnover from self-employment and property, added together across every source. HMRC’s qualifying income guidance, last updated 11 September 2026, says it is measured before expenses. Your profit does not matter.

HMRC tests the return for the tax year before the year you would join:

Qualifying incomeReturn testedJoin from
Over £50,0002024-256 April 2026
Over £30,0002025-266 April 2027
Over £20,0002026-276 April 2028

What counts towards the threshold?

These amounts count, according to HMRC:

  • turnover from every sole trade
  • UK property income, and foreign property income if you are UK resident
  • your share of income from jointly owned property
  • VAT, if you use the cash basis and choose to include VAT in business income
  • trading or property income you are entitled to as a beneficiary of a bare trust
  • income paid to you directly from an interest in possession trust
  • continuing profits under the transactions in UK land rules
  • personal self-employment or property income that a partnership reports to you

What does not count?

Other income is left out, even though you still report it on your return. HMRC excludes:

  • employment income taxed through PAYE
  • the State Pension and private pensions
  • dividends, including from your own company, and savings interest
  • your profit share as a partner in a partnership
  • transition profits from basis period reform
  • income covered by qualifying care relief, such as foster carers’ receipts
  • one-off UK land transactions within a single tax year
  • income from UK REITs or property authorised investment funds

How to work out your figure

Follow these steps using your 2025-26 return.

  1. List every sole trade. Take turnover from each SA103 page, not net profit.
  2. Add property income. Use the gross rents from your SA105 (UK) and SA106 (foreign) pages. For joint lets, use only your share.
  3. Leave out excluded income. Strip out salary, pensions, dividends, savings and partnership shares.
  4. Adjust short periods. If you are a landlord with less than 12 months of property income, scale it up to a full year yourself. HMRC does this for sole traders.
  5. Compare with £30,000. Over £30,000 means you join from 6 April 2027. Our £30,000 threshold guide covers what happens next.

Worked examples

HMRC’s own examples show how the rules apply.

  • Mixed income. £25,000 of rent plus £27,000 of self-employment turnover gives qualifying income of £52,000.
  • Joint property. Siblings share a £50,000 rent equally. Each has qualifying income of £25,000. See MTD for jointly owned property.
  • Ceased property, continuing trade. You sold a rental in 2024-25 but kept your sole trade. The property income still counts.
  • Everything stopped. You sold your property and stopped trading before 6 April 2026 to take a job. You do not need to use MTD.
  • Short first year. You traded for six months. HMRC doubles your income to estimate a full year.
  • Living in Spain. You rent out a UK flat and run a sole trade in Spain. Only the UK rent counts.

Which applies to you?

  • If your qualifying income is £30,000 or less for 2025-26, you do not join in April 2027. Check your 2026-27 figure against £20,000.
  • If it is over £30,000, you join from 6 April 2027 unless an exemption applies. Read who does not have to join.
  • If all your trading and property income stopped before 6 April 2026, tell HMRC if your 2025-26 return is not yet filed. HMRC updates its records and writes to confirm.
  • If you have several income sources, see MTD with multiple income sources.

What if your return changes?

Amending your return can change whether you are in. HMRC’s guidance says:

  • An amendment before the tax year starts can bring you above the threshold, so you must join, or below it, so you need not.
  • An amendment after the tax year starts that takes you below the threshold means you do not need MTD for that year. You can carry on voluntarily or opt out.
  • An increase after the tax year starts is not taken into account for that year.

If your qualifying income later stays below the threshold for three tax years in a row, you can opt out.

Non-residents and temporary exemptions

Residence changes what counts. If you were not UK resident, only UK property income and self-employment income declared on your UK return count. Foreign property income does not.

Budget 2026 confirmed that people eligible for qualifying care relief, non-UK resident foreign entertainers and sportspeople, and people expected to be non-resident will be exempt from MTD for Income Tax until further notice. The Budget 2026 overview of tax legislation says secondary legislation will follow before April 2027.

What to do now

  1. File your 2025-26 return early. It decides whether you join in April 2027, and it is due by 31 January 2027.
  2. Check your figure even without a letter. GOV.UK says HMRC writes to people over the threshold, but checking is your responsibility.
  3. Choose software and sign up before 6 April 2027. See how to sign up for MTD for Income Tax.

Frequently asked questions

Is MTD qualifying income based on turnover or profit?

Turnover. Qualifying income is your self-employment and property income before any expenses are deducted.

Does my salary count towards MTD qualifying income?

No. Employment income taxed through PAYE is excluded, along with pensions, dividends, savings interest and partnership profit shares.

Do I count all the rent from a property I own with my partner?

No. You count only your own share of the income. If you only know your share after expenses, HMRC says that figure is used.

Does VAT count towards qualifying income?

Only if you use the cash basis and choose to include VAT in your business income. Otherwise turnover is measured without VAT.

Which return decides whether I join MTD in April 2027?

Your 2025-26 Self Assessment return. If qualifying income on it is over £30,000, you must start on 6 April 2027.

What if I stopped trading before April 2026?

If all your self-employment and property income stopped before 6 April 2026, you will not need to use MTD. You must still file a return for the income you received before you stopped.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.