Part 1 — Qualifying Income Explained (April 2026)
This is Part 1 of our Making Tax Digital (MTD) guide for self-employed people and landlords. It explains “qualifying income” — the key figure HMRC uses to decide who must enrol for Making Tax Digital for Income Tax from 6 April 2026. If your qualifying income is above the threshold, you’ll need to keep digital records and report using MTD-compatible software. (GOV.UK)
Quick check: when does MTD for Income Tax start for me?
HMRC looks at your qualifying income (gross income/turnover before expenses) from self-employment and property, added together. (GOV.UK)
You’ll need to use MTD for Income Tax if your qualifying income is over:
£50,000 (based on the 2024/25 tax return) → MTD from 6 April 2026
£30,000 (based on the 2025/26 tax return) → MTD from 6 April 2027
£20,000 (based on the 2026/27 tax return) → Government plans to introduce legislation to lower the threshold (campaign guidance currently points to 6 April 2028) (GOV.UK)
What is “qualifying income” for MTD?
Your qualifying income is the total income you receive in a tax year from:
self-employment, and
property income (such as rental income)
If you have more than one business or more than one property income source, HMRC adds them together. (GOV.UK)
What income counts (and what doesn’t)?
Income that counts toward qualifying income
Qualifying income includes only:
self-employment income (gross/turnover)
property income (gross rents/receipts) (GOV.UK)
Income that does NOT count toward qualifying income
Other income you report through Self Assessment does not count, including:
employment income (PAYE)
your share of profit from a partnership as an individual partner
dividends (including from your own company)
State Pension
private pensions (GOV.UK)
Is qualifying income based on profit or turnover?
It’s based on gross income (turnover) before expenses.
HMRC assesses your gross income — that means the income you receive before you deduct costs/expenses. (GOV.UK)
How do I work out my qualifying income?
HMRC will look at the Self Assessment tax return you submitted in the previous tax year to assess your qualifying income. You should also check it yourself. (GOV.UK)
Example (simple)
Your gross income could be:
£25,000 from rental income
£27,000 from self-employment income
In that case, your total qualifying income would be:
£25,000 + £27,000 = £52,000 (GOV.UK)
If HMRC reviews your return and your qualifying income is above the relevant threshold, they will write to confirm you need to use MTD from the start of the next tax year.
Important: even if you do not receive a letter, you should still check your qualifying income and sign up if you are required to use MTD. (GOV.UK)
What if I own rental property jointly?
If you get income from a jointly owned property, your share of the property income counts towards your qualifying income.
Example
you and your sibling jointly own a property generating £50,000 in income
you each receive an equal share (50/50)
you do not have self-employment income
Your qualifying income would be £25,000. (The Association of Taxation Technicians)
What if I only receive my share after expenses?
If you only receive notice of your share after expenses have been deducted, HMRC will assess that figure for your qualifying income. (GOV.UK)
Transactions in UK land (one-off land deals)
If your income is treated as profits of a trade under the transactions in UK land rules, it will not count towards your qualifying income if it:
only falls within one tax year, and
is not a continuing source
You should have recorded when the income source ceased on your tax return. (GOV.UK)
FAQs (quick answers)
Do dividends count towards qualifying income?
No — dividends are not included in qualifying income for MTD. (GOV.UK)
Does PAYE salary count?
No — employment income is not included in qualifying income. (GOV.UK)
What if I’m a partner in a partnership?
Your share of partnership profit as an individual partner does not count towards qualifying income (but other qualifying income, like your own rental income, may still bring you into MTD). (GOV.UK)
What if I don’t get a letter from HMRC?
You still need to check your qualifying income and sign up if you’re required to use MTD. (GOV.UK)
Next steps
Part 2 will explain what you need to do next, including:
what “digital records” mean in practice
what MTD-compatible software is
what quarterly updates are (and what they include)
Contact us ASAP to be ready
