MTD qualifying income: what counts
Whether you fall into the April 2026, 2027, or 2028 MTD group comes down to one number: your qualifying income. It is a HMRC-specific definition that does not match "total income" on your Self Assessment, and getting it wrong by even a few thousand pounds can change your start date.
By Mehmet Demir · Last reviewed: 2 May 2026 · Source: HMRC · Methodology
Bottom line
Qualifying income is your gross self-employment turnover plus your gross UK property income plus any gross foreign property income declared on UK Self Assessment. Everything else (PAYE, dividends, savings interest, pensions, partnership profit shares) is excluded.
HMRC checks the figure in a specific past tax year, not today. Cross the threshold for that year, and you are in the group for the matching MTD start date.
What counts
- Self-employment turnover. Gross sole-trader income before expenses, capital allowances, or pension contributions.
- UK property income. Gross rent received from UK rental property, before mortgage interest, repairs, agent fees, or wear-and-tear.
- Foreign property income on UK SA. Foreign rent declared on your UK Self Assessment counts if you are UK tax resident.
- Income figures including VAT. If you include VAT in the business income you declare to HMRC (for example, on the cash basis), the VAT-inclusive figure is what counts toward your qualifying income.
Source: HMRC: Check if you'll need to sign up for MTD for Income Tax ↗
What does not count
- PAYE salary or wages. Even if you also have self-employment income.
- Dividends. Including dividends from your own limited company.
- Savings interest. Bank, building society, or bond interest.
- Pensions and annuities. State pension, private pension, and annuity income.
- Partnership profit shares. Mandated separately, not part of MTD ITSA qualifying income.
- REIT and PAIF distributions. Treated as investment income.
- Capital gains. Reported under CGT, not Income Tax.
Worked examples
Sole trader with PAYE side job
£42,000 PAYE salary plus £35,000 freelance turnover. Qualifying income is £35,000. Below £50,000 in 2024-25, so not in the April 2026 group.
Landlord with mortgage
£62,000 gross rent, £25,000 mortgage interest. Net taxable profit is roughly £37,000, but qualifying income is £62,000. In the April 2026 group if 2024-25 looked the same.
Mixed sole-trader plus landlord
£28,000 freelance turnover plus £24,000 gross rent. Qualifying income is £52,000. Both sources combine and push you over the £50,000 threshold.
Limited company director
£12,000 director salary plus £40,000 dividends plus £15,000 personal rental income. Qualifying income is £15,000. Salary and dividends do not count; only the rental income does.
FAQs
What is qualifying income for Making Tax Digital?v
Is qualifying income before or after expenses?v
Does PAYE salary count toward qualifying income?v
Do dividends count toward qualifying income?v
Which tax year does HMRC look at?v
What about partnership profits?v
Found this useful?
Related guides
Find your deadline in 60 seconds
Run the eligibility checker for an answer tailored to your income bracket and taxpayer type.
Start the check →This guide is general information, not professional tax advice. Always verify against HMRC's official guidance or speak to a qualified accountant.