Whether you need to use Making Tax Digital for Income Tax comes down to one number: your qualifying income. It is not your total income and it is not your profit. It is your self-employment and property income added together, before expenses, taken from the Self Assessment return for an earlier tax year.
Most mistakes about Making Tax Digital come from getting this number wrong in one direction or the other. This guide goes through what goes in, what stays out, and the less obvious cases.
The thresholds and which year HMRC looks at
HMRC checks the return for the tax year two years before your start date. The current timetable:
| Qualifying income on your… | is more than… | you start on |
|---|---|---|
| 2024/25 return | £50,000 | 6 April 2026 |
| 2025/26 return | £30,000 | 6 April 2027 |
| 2026/27 return | £20,000 | 6 April 2028 |
If your qualifying income is £20,000 or less, you are automatically exempt for now. The test is "more than", so exactly £50,000 is not over the first threshold.
What counts
HMRC defines qualifying income as your total income from self-employment and property, before expenses. In practice that means:
- Self-employment turnover. Your sales, takings and fees as a sole trader, before costs. If you run more than one trade, add them together.
- UK property income. Gross rent from all your UK lettings, including furnished holiday lets.
- Foreign property income, if you were UK resident for the year HMRC is checking.
- Your share of jointly owned property. Only your share, not the whole rent. See MTD for jointly owned property.
- Income that has since stopped, as long as you still have another self-employment or property source. If you sold your rental property but you are still trading, the rent you declared still counts.
HMRC's guidance also covers some less common cases that count: property or trading income you are entitled to as the beneficiary of a bare trust, income paid straight to you from an interest in possession trust, and income taxed as a trade under the transactions in UK land rules where it continues over more than one year. If you use the cash basis and are VAT registered, VAT counts if you include it in your income.
What does not count
- Employment income (PAYE salary)
- Your share of profit from a partnership, as an individual partner
- Dividends, including from your own company
- The State Pension and private pensions
- Savings interest
- Qualifying care relief, for foster and kinship carers
- Income from UK REITs and property authorised investment funds
- Transition profits from basis period reform
- A one-off profit taxed under the transactions in UK land rules that falls in a single tax year
Leaving these out of the threshold does not mean leaving them off your return. Under Making Tax Digital you still report all your income in the tax return you submit through your software. HMRC adds some of it for you, such as PAYE and pensions it already knows about.
Turnover, not profit
This is the one that catches people. A landlord with £52,000 of rent and £30,000 of mortgage interest, repairs and agent fees has a profit of £22,000, but qualifying income of £52,000. A plumber who invoices £60,000 and spends £25,000 on materials and a van has £60,000 of qualifying income. Both needed to use Making Tax Digital from April 2026 if those were their 2024/25 figures.
Worked examples
| Income on the 2024/25 return | Qualifying income | In from April 2026? |
|---|---|---|
| £25,000 rent and £27,000 self-employment turnover (HMRC's own example) | £52,000 | Yes |
| £70,000 salary and £22,000 rent | £22,000 | No. Salary does not count |
| £40,000 self-employment turnover and £15,000 of dividends from a company | £40,000 | No |
| £60,000 rent from a flat owned 50/50 with a sibling | £30,000 | No |
| £48,000 rent and £4,000 from a trade that stopped during the year, while the lettings continued | £52,000 | Yes |
Every "No" above is only for April 2026. The same person is tested again each year, against £30,000 using their 2025/26 return and £20,000 using their 2026/27 return. The salaried landlord with £22,000 of rent, for example, comes in from April 2028 if their 2026/27 rent is still over £20,000.
Part years and unusual accounting periods
If your accounting period is shorter or longer than 12 months, for example because you started trading part way through the year, HMRC scales sole trader income to a full year where it has the information. Six months of trading is doubled. For property income, HMRC expects you to do the scaling yourself.
If you were not UK resident
Non-residents are tested on UK property income and any self-employment income declared on their UK return. Foreign rent and overseas self-employment income not on the UK return are left out. Separately, if your 2024/25 return included the SA109 residence pages, you are automatically exempt for 2026/27, and you join from April 2027 if your 2025/26 qualifying income is over £30,000. If you expect to include SA109 in a later return, you can apply for the same exemption.
Do not wait for a letter
HMRC reviews each return and writes to people who are over the threshold, and from September 2026 it has started signing people up itself. But HMRC's guidance is clear that it is still your responsibility to check. If your return is amended before the start of a tax year and that changes your qualifying income, that can change when you start too.
If your income drops below the threshold later
Once you are in, you do not leave the first year your income falls. You can choose to opt out if your qualifying income has been below the relevant threshold for three tax years in a row, or if you amend the previous year's return and that takes you below. You can also stay in voluntarily.
Check your own figure
Take the Self Assessment return for the year that matters, add up your self-employment turnover and your share of property income before expenses, and compare it with the threshold. Our MTD checker asks the same questions and tells you which year you start. If you are in, VoxaMTD sends quarterly updates for self-employment and UK property income directly to HMRC, and sending them is free.
This guide is general information based on HMRC's published guidance as at 27 September 2026. It is not tax advice. Check GOV.UK or speak to a tax adviser about your own circumstances.