MTD qualifying income: what counts, and is it gross or net?
Gross. Qualifying income is your self-employment and property income before expenses, added together, taken from the tax return for an earlier year. Salary, dividends, pensions and partnership shares are ignored.
Independent tool, not affiliated with HMRC. It applies the rules published on GOV.UK to the figures you enter. It is not tax advice. HMRC’s letter and your HMRC online account are the only authoritative answer; if in doubt, ask HMRC or a tax adviser.
Worked examples from GOV.UK
- Sole trader and landlord: £27,000 of self-employment income plus £25,000 of rent = £52,000. If that is the 2024 to 2025 return, MTD applies from 6 April 2026.
- Joint owner: a property owned with a sibling brings in £50,000 of rent, shared equally, and there is no self-employment income: qualifying income is £25,000.
- New sole trader: 6 months of trading in the first tax year — HMRC doubles the income.
- UK resident with a French flat: a UK sole trader who also lets a property in France counts both.
- Spanish resident with a UK flat: only the UK rent counts; the Spanish self-employment does not.
What counts
- Self-employment income as a sole trader, all businesses together.
- UK and foreign property income (if UK resident), including furnished holiday lets, which are part of your property business from April 2025.
- Your share of jointly owned property income. If you are only told your share after expenses, that net figure is what HMRC uses.
- Property or trading income from a bare trust you benefit from, and income from an interest in possession trust paid to you directly.
- Profits treated as a trade under the transactions in UK land rules, when the source continues over more than one tax year.
- Disguised investment management fees and income-based carried interest, including amounts a partnership tells you about.
- Income from a source that has stopped, if you have another continuing self-employment or property source.
What does not count
- Employment (PAYE) income, dividends (including from your own company), the State Pension and private pensions.
- Your share of profit from a partnership as an individual partner. You still report it on your return through the software.
- Transition profits from basis period reform, spread over 2024 to 2025 and the next 4 tax years.
- Qualifying care relief received by foster or kinship carers.
- One-off transactions in UK land that fall within a single tax year.
- Income from UK REITs and PAIFs.
- Averaging relief (farmers, creative artists) does not change qualifying income.
If you amend a return
A change made before the start of a tax year counts both ways: it can bring you into MTD for that year or take you out. A change made after the start of the year only counts if it takes you below the threshold; you can then opt out or carry on voluntarily.
Questions people ask
Is it turnover or profit?
Turnover. Qualifying income is the total before expenses. A landlord with £32,000 of rent and £20,000 of mortgage interest and repairs has £32,000 of qualifying income.
Do I include VAT?
Only in one case described by GOV.UK: if you use the cash basis and are VAT-registered, you can choose to include or exclude VAT when you declare business income. If you include it, it counts towards qualifying income.
Does a property I sold during the year still count?
Yes, if you still have another self-employment or property source. GOV.UK’s example: a sole trader who sold their only rental property in 2024 to 2025 still has that year’s rent counted. If all your self-employment and property income stopped before 6 April 2026, you do not need MTD, but you should tell HMRC.
I only started trading halfway through the year. What figure is used?
HMRC annualises: 6 months of trading counts double. For property income, GOV.UK says you must annualise it yourself. The calculator above does both.
I live abroad and let a UK flat. What counts?
If you were not UK resident in 2024 to 2025, only UK property income and self-employment income declared on your UK return count. Foreign property and undeclared foreign self-employment income are left out. Filing the SA109 residence page also gives a temporary exemption for 2026 to 2027.
Official sources
- Work out your qualifying income for Making Tax Digital for Income Tax — GOV.UK, last updated 11 September 2026, read 29 September 2026.
- Find out if and when you need to use Making Tax Digital for Income Tax — GOV.UK, last updated 26 March 2026, read 29 September 2026.
- Use Making Tax Digital for Income Tax: Add or cease income sources — GOV.UK, last updated 16 July 2026, read 29 September 2026.
- Find out if you can get an exemption from Making Tax Digital for Income Tax — GOV.UK, last updated 28 May 2026, read 29 September 2026.
Rules checked against GOV.UK on .