Scope: For sole traders and landlords checking the staged start of Making Tax Digital for Income Tax. It explains the threshold input, not the amount of Income Tax due.
The short answer
Qualifying income is the total gross income before expenses from self-employment and property. Add the relevant sources together.
Employment pay, dividends and pensions are examples of income that do not count towards this threshold, although they still matter to the final tax return and tax bill.
The staged tests currently are:
| Relevant Self Assessment return | Qualifying income | MTD start |
|---|---|---|
| 2024 to 2025 | over £50,000 | 6 April 2026 |
| 2025 to 2026 | over £30,000 | 6 April 2027 |
| 2026 to 2027 | over £20,000 | 6 April 2028 |
The word “over” matters: the table does not say “£50,000 or more”.
Start with gross source figures
Use the amounts before deducting business or property expenses. For a sole trade, this is broadly turnover, sales, takings and fees reported for the relevant source. For property, use the gross property-income figure required by HMRC’s guidance.
Do not use taxable profit, cash left in the bank or the final tax bill. Those can be much lower than gross income and answer a different question.
Combine the in-scope sources
List each sole trade, UK property business and foreign-property source covered by HMRC’s qualifying-income rules. Add them together even if no single source crosses the threshold.
For example, £34,000 gross sole-trade income plus £18,000 gross property income gives £52,000 qualifying income before considering any special rules. That combined figure is over £50,000. It is not reduced by the expenses used later to calculate taxable profit.
Use the precise return figures and HMRC’s special instructions for jointly owned property, the trading and property allowances, cash basis, foreign income and relevant reliefs. An illustrative addition does not decide those details.
Exclude unrelated income from the threshold
Do not add employment salary, partnership profit received only as an individual partner, dividends, State Pension or private pension merely because they appear on the same Self Assessment return. HMRC’s qualifying-income calculation focuses on the specified self-employment and property gross income.
These excluded sources are not tax-free. They are excluded only from this MTD threshold calculation and must still be reported where the return rules require them.
Match the figure to the correct return
The start year looks back to a specified Self Assessment return. For an April 2026 start, HMRC uses the 2024 to 2025 return; later stages use the subsequent returns in the table.
HMRC reviews returns and may write to people above the threshold. The taxpayer remains responsible for checking whether and when MTD applies, even if a letter has not arrived.
If a return is amended, or HMRC’s record differs from your schedule, follow the current guidance and contact HMRC where necessary. Do not select a start date from an informal estimate when filed figures are available.
If a business or property source has ceased
HMRC’s current guidance distinguishes between one source ending and every self-employment and property source ending. If one source ceased but another qualifying source continued, the ceased source can still form part of the qualifying-income test for the relevant return year.
If all self-employment and property sources ceased before 6 April 2026, the person is not required to use MTD for Income Tax for 2026 to 2027. HMRC says the person should update its records; otherwise HMRC may still sign them up using the information it holds. Return amendments can also change the result, so use the live HMRC instructions rather than assuming an amended figure automatically changes an obligation that has already started.
A practical worksheet
Create columns for:
- source name and type;
- gross figure on the relevant return;
- return box or supporting schedule;
- whether HMRC treats it as qualifying income;
- ownership share where relevant;
- special allowance treatment; and
- included qualifying amount.
Add included amounts and compare the total with the threshold for that return. Retain the return and worksheet with the decision.
Common mistakes
- Using profit after expenses.
- Testing each business separately rather than adding sources.
- Adding PAYE salary or pensions to qualifying income.
- Using the current year’s forecast instead of the specified earlier return.
- Reading “over” as “equal to or over”.
- Assuming no HMRC letter means the rules do not apply.
- Assuming a ceased source can always be removed from the earlier-return test.
- Ignoring an exemption route after the threshold is met.
What to do next
- Identify the return that controls the proposed start year.
- Extract gross self-employment and property figures.
- Apply the source-specific HMRC rules.
- Add qualifying sources and compare with the exact threshold.
- Check whether an exemption applies.
- If in scope, follow the sign-up and preparation guide.