Making Tax Digital for Income Tax
What counts as MTD qualifying income?
Qualifying income is what HMRC measures against the £50,000, £30,000 and £20,000 thresholds to decide whether you are in Making Tax Digital. The catch that trips most people: it is your gross self-employment and property income — turnover, not profit. Every classification below is read from HMRC's own guidance, 15 August 2026.
Turnover, not profit — and only two kinds of income
Qualifying income is your total gross income from self-employment and property, before any expenses. Nothing else counts towards the threshold — not your salary, not a pension, not dividends. So you can be well under the threshold on profit and still be in MTD on turnover.
"Qualifying income is your total income from self-employment and property. This is the amount before expenses (also known as turnover), based on the tax return you submitted in the previous tax year." — GOV.UK, Work out your qualifying income for Making Tax Digital for Income Tax
HMRC checks the figure against the Self Assessment return you filed for the previous tax year — which is why each threshold is dated a year before it bites. Not sure which wave is yours? Check your MTD start date.
| Self-employment (sole trader) income | Counts in full, measured before you deduct any expenses — it is your turnover, not your profit. |
| UK property (rental) income | Counts before expenses. If your rental accounting period is not 12 months, you must annualise it yourself. |
| Foreign property and foreign self-employment income (if UK resident) | If you were UK tax resident, foreign property and self-employment income declared on your Self Assessment return counts. |
| Your share of a jointly owned property | Only your share counts. If you are only told your share after expenses are deducted, HMRC assesses that after-expenses figure. |
| Income from a source that has since ceased | If a self-employment or property source stopped after your last return but you still have another continuing source, the ceased income still counts. |
| VAT you choose to include (cash basis, VAT registered) | On the cash basis you can declare business income with or without VAT; if you include VAT, it counts towards qualifying income. |
| Property or trading income from a bare trust you are entitled to | Any property or trading income you are entitled to as a beneficiary of a bare trust counts. |
| Interest in possession trust income paid directly to you | Property or trading income paid to you directly, bypassing the trustees, counts. |
| Transactions in UK land treated as trade profits (continuing) | Counts where the income is a continuing source spanning more than one tax year. |
| Disguised investment management fees and income-based carried interest | Treated as the profits of a specific trade, so they count. |
| Personal self-employment or property income reported to you by a partnership | Your own self-employment or property income that a partnership tells you about counts, and needs digital records and quarterly updates — even though the partnership profit share itself does not. |
| Employment (PAYE) income | Salary and wages taxed under PAYE never count. |
| Your share of partnership profit | Your profit share as an individual partner does not count; you report it in your software but keep no MTD digital records for it. |
| Dividends | Including dividends from your own company. |
| State Pension | Does not count. |
| Private pensions | Does not count. |
| Transition profits from basis period reform | Transition profits assessed across 2024/25 and the following four tax years do not count. |
| Qualifying care relief | Relief received by foster carers, kinship carers and similar does not count. |
| One-off transactions in UK land | If the income falls within a single tax year and is not a continuing source, it does not count. |
| Income from UK REITs or PAIFs | Income from Real Estate Investment Trusts or Property Authorised Investment Funds does not count. |
| Foreign income not declared on a UK return (if non-UK resident) | If you were not UK tax resident, foreign property and self-employment income you have not declared on your UK Self Assessment return does not count. |
"Does not count" is not "ignore it". An excluded income type does not, on its own, pull you into MTD — but you may still have to report it on your tax return. And averaging relief (for farmers and creative artists) does not change your qualifying income either way.
The worked example that catches people out
You are employed on a £60,000 salary and rent out one flat that brings in £14,000 a year in rent, £3,000 of which goes on the mortgage interest and repairs. Are you in MTD?
No — but it is closer than it looks. Your salary is irrelevant; only the property income counts, and it is measured gross, so HMRC looks at the £14,000, not the £11,000 you actually keep. That is under the £20,000 threshold that applies from April 2028, so you stay out — for now. Add a second flat, or a side trade, and the gross figures add together. That is the number to watch, and it is not the one on your tax return's profit line.
The records are the same either way
Whether you are just over the line or well clear of it, the work MTD asks for is the same: keep your income and expenses as digital records through the year, then file a quarterly update from them. The cheapest way to do that is a spreadsheet you already understand plus bridging software to submit — 17 recognised products will do the submitting for free.
Mostly a landlord? The Rental ROI & Yield Calculator keeps each property's income and costs straight all year, so the gross figure that decides your MTD status is never a guess.
Working this out for clients? Qualifying income is assessed per person, so an accountant has to check it client by client. The MTD Practice Tracker keeps that list in one place, £39 one-time.
Common questions
Is qualifying income before or after expenses?
Before. It is your gross income — turnover, not profit. HMRC's guidance calls it "the amount before expenses (also known as turnover)". A sole trader turning over £55,000 but making £25,000 profit is measured on the £55,000, and is in Making Tax Digital.
Does my salary, pension or dividend income count?
No. Only self-employment and property income count towards the threshold. Employment (PAYE) income, State and private pensions, dividends — including from your own company — and your share of partnership profit are all excluded. You may still report them on your return; they just do not pull you into MTD.
I have a job and rent out a flat — am I in MTD?
Your gross rent counts; your salary does not. If your combined gross self-employment and property income is over the threshold for the relevant year — £50,000 for 2024/25, £30,000 for 2025/26, £20,000 for 2026/27 — you are in, however large your salary is.
How does qualifying income work for a jointly owned property?
Only your share counts. Jointly own a property generating £50,000 and take an equal half, and your qualifying income from it is £25,000. If you are only notified of your share after expenses have been deducted, HMRC assesses that after-expenses figure instead.
Which year's income is used?
HMRC checks the Self Assessment return you submitted for the previous tax year. That is why the £50,000 threshold is measured on 2024/25 income for an April 2026 start, £30,000 on 2025/26 income for April 2027, and £20,000 on 2026/27 income for April 2028.
Use this table
If you are writing about MTD qualifying income and want the classification, take it. It is published under CC BY 4.0 — use it commercially, just credit the source so your readers can check the working.
Machine-readable: /mtd-qualifying-income/data.json — every row, the basis of measurement, the thresholds, the method and the caveats.
Citation: “Qualifying income for Making Tax Digital for Income Tax is gross self-employment and property income — turnover, not profit. Employment, pension, dividend and partnership-profit income do not count towards the £50,000, £30,000 and £20,000 thresholds.” — Fableworks HQ, compiled from HMRC guidance, 15 August 2026.
We would rather you quoted it accurately than not at all. HMRC updates its guidance; if a row here has aged, HMRC's page is the live answer.
Keep going
Am I in MTD? · Do I need to buy MTD software? · What goes in a quarterly update · Every MTD deadline · MTD for landlords
Classifications read from HMRC's Work out your qualifying income for Making Tax Digital for Income Tax, and thresholds from Find out if and when you need to use Making Tax Digital for Income Tax, both read 15 August 2026. HMRC's guidance is the live answer if you are reading this long after that date.