The rule
Qualifying income is total income from self-employment and property, before expenses (turnover), based on the tax return submitted for the previous tax year. Several sources are added together. GOV.UK’s own example: £25,000 of rental income plus £27,000 of self-employment income gives qualifying income of £52,000.
| Threshold | Return HMRC looks at | Start date |
|---|---|---|
| Over £50,000 | 2024 to 2025 | 6 April 2026 |
| Over £30,000 | 2025 to 2026 | 6 April 2027 |
| Over £20,000 | 2026 to 2027 | 6 April 2028 |
| £20,000 or less | Automatically exempt | |
What does not count
- Employment income taxed through PAYE.
- A share of partnership profit as an individual partner. It still goes on the tax return through the software, but needs no digital records or quarterly updates.
- Dividends, including from the client’s own company.
- State Pension and private pensions.
- Transition profits from basis period reform, and qualifying care relief received by foster and kinship carers.
Cases practices get asked about
Jointly owned property
Only the client’s share counts. Two siblings sharing £50,000 of rent equally each have £25,000 of qualifying income. If the client is only told their share after expenses, HMRC assesses that figure.
VAT-registered, cash basis
The client can include or exclude VAT when declaring business income. If it is included, it counts towards qualifying income.
A source that has stopped
If one source has ceased but another continues, the ceased income still counts. If all self-employment and property income ceased before 6 April 2026, MTD is not needed, but the client should tell HMRC; otherwise HMRC signs them up from the information it holds.
A short or long first year
For sole traders, HMRC annualises qualifying income where it can: six months of trading is doubled. Landlords must annualise property income themselves.
Amended returns
An amendment made before a tax year starts can bring a client into, or out of, MTD for that year. After the year starts, an amendment can only take them out.
Dropping below the line later
Once in MTD, a client whose qualifying income falls below the threshold for 3 tax years in a row can choose to opt out.
Sources (GOV.UK, checked 27 Oct 2026)
Common questions
Is MTD qualifying income based on profit or turnover?
Turnover. GOV.UK defines qualifying income as total self-employment and property income before expenses.
Does PAYE salary count towards the MTD threshold?
No. Employment income, a partnership profit share, dividends and pensions do not count towards qualifying income.
How is jointly owned rental income treated for MTD?
Only your share counts. If you and a sibling equally share £50,000 of rental income, your qualifying income is £25,000.
Can I leave MTD if my income falls?
Once using MTD, if qualifying income is below the relevant threshold for 3 tax years in a row, you can choose to opt out.