Qualifying income
Qualifying income is the total gross income a person receives from self-employment and property in a tax year, before deducting any expenses, allowances or reliefs. HMRC uses this figure, not your profit, to decide if and when you must use Making Tax Digital for Income Tax, as set out in HMRC's guidance on who needs to use MTD, updated March 2026.
What counts as qualifying income
Two income sources count, and they are added together. The first is gross self-employment income, meaning your total sole trader turnover before expenses. The second is gross property income, meaning your total rental receipts and related payments from UK property, plus foreign property income if you are a UK resident. Jointly owned property counts only for your share: a couple splitting £60,000 of rent equally each has £30,000 of qualifying income from it.
Everything else is excluded. PAYE salary, pensions, dividends, savings interest, capital gains and income from a limited company do not count towards the test. Partnership income is also currently excluded, although HMRC has confirmed partnerships will join MTD at a later date.
The thresholds and start dates
Your qualifying income is measured against three phased thresholds:
Qualifying income | Tax year assessed | MTD starts |
|---|---|---|
Over £50,000 | 2024/25 | 6 April 2026 |
Over £30,000 | 2025/26 | 6 April 2027 |
£20,000 or more | 2026/27 | 6 April 2028 |
The assessment always looks two years back, because HMRC checks the most recent completed tax return. That catches landlords out in both directions: a strong 2024/25 pulls you into MTD from April 2026 even if this year is quieter, and this year's rent rise sets your position for April 2028.
Gross means gross
From working with self-managing landlords across the UK, this is the single most common misreading of the rules. A landlord collecting £55,000 in rent with £25,000 of mortgage interest, repairs and agent fees has £30,000 of profit but £55,000 of qualifying income, and is inside MTD from April 2026. Expenses, the property allowance and reliefs are all ignored at this stage; they still reduce the tax you pay, but they never reduce the figure that decides whether MTD applies.
Checking your position
HMRC wrote to taxpayers whose 2024/25 returns showed qualifying income over £50,000, but the responsibility to check sits with you, and HMRC's online checking tool gives a definitive answer from your own figures. Landlords using August consistently tell us the two-year look-back is what they had missed: several assumed a quiet current year kept them out, when the earlier return had already settled the question. If the test brings you in, our guide to how Making Tax Digital works for landlords covers what happens next, and the full timetable and an MTD calculator are on our Making Tax Digital hub. If you miss the deadlines that follow, MTD penalties apply.
Frequently asked questions
Is qualifying income worked out before or after expenses?
Before. Qualifying income is gross income, so nothing you spend on the property reduces it. A £52,000 rent roll with £30,000 of costs is still £52,000 for the MTD test.
Does my salary count towards qualifying income?
No. Employment income taxed through PAYE is excluded, as are pensions, dividends and savings interest. Only self-employment and property income are combined for the test.
What happens if my income falls below the threshold?
You stay in MTD until your qualifying income has been below the threshold for three consecutive tax years, based on your filed returns. A single quieter year does not take you out.
Can I be exempt even if my income is over the threshold?
Yes, in limited cases. Digital exclusion, on grounds such as age, disability or lack of internet access, requires an application to HMRC. Trusts, personal representatives of someone who has died, and a small set of other categories are automatically exempt.
