What Counts as Qualifying Income for MTD?
Qualifying income is the gross income from self-employment and property letting before deducting expenses. It is not the same as your taxable profit. HMRC uses this figure to decide whether MTD for Income Tax applies to you.
What does count: gross sole-trader turnover, gross UK rental income, gross overseas property income, furnished holiday let income, and income from jointly-owned property (your share of the gross rents).
What does not count: PAYE salary, dividends, savings interest, pension income, capital gains, partnership profit shares, or income inside a limited company.
The Three MTD Income Thresholds
- £50,000 qualifying income — MTD applies from 6 April 2026.
- £30,000 qualifying income — MTD applies from 6 April 2027.
- £20,000 qualifying income — MTD applies from 6 April 2028.
Is MTD Based on Gross Income or Profit?
MTD thresholds use gross income, not profit. A landlord with £55,000 of gross rent and a £10,000 profit after mortgage interest is still inside the £50,000 band from April 2026. The qualifying-income test happens before any allowable expenses.
Combining Self-Employment and Rental Income
If you have both self-employment and property income, you add the two gross figures together to test against the threshold. You do not assess each income source separately. Example: £28,000 sole-trader turnover plus £24,000 gross rents = £52,000 qualifying income, so MTD applies from April 2026.
Rental Income Threshold for Making Tax Digital
There is no separate rental income threshold for MTD. Landlords use the same qualifying-income figures (£50k / £30k / £20k). A landlord with £35,000 of gross UK rental income and no other qualifying income joins MTD from April 2027.
Self-Employed Income Threshold for Making Tax Digital
For sole traders, the self-employed income threshold for MTD is the qualifying-income threshold for the relevant tax year. It is based on gross turnover from your trade, plus any rental income you also receive. You apply the £50,000 / £30,000 / £20,000 tests in the same way.
What If Your Income Fluctuates?
HMRC determines MTD eligibility based on the qualifying income reported on a recent Self Assessment return. If your income drops below the threshold for several years, you may eventually exit MTD, subject to HMRC’s rules.
HMRC's Transitional Rules
HMRC publishes transitional guidance covering taxpayers who cross the threshold near a start date. Always check the latest GOV.UK guidance, as rules may evolve.
How to Calculate Your Qualifying Income
Add together your gross self-employment turnover and your gross property income for the relevant tax year. Use this combined figure to test against the threshold.