Work out your qualifying income for Making Tax Digital for Income Tax
Find out what counts as qualifying income from self-employment and property for using Making Tax Digital for Income Tax.
Working out your qualifying income
Your qualifying income is the total income you get in a tax year from self-employment and property.
All other sources of income reported through Self Assessment, such as income from employment (PAYE), a partnership or dividends (including those from your own company), do not count towards your qualifying income.
HMRC will assess your gross income (also called your turnover) before you deduct expenses.
For example, your gross income (income before you deduct expenses) could be:
- £25,000 from rental income
- £27,000 from self-employment income
In this example, your total qualifying income would be £52,000.
How HMRC will assess your qualifying income
To assess your qualifying income for a tax year, we’ll look at the Self Assessment tax return that you submitted in the previous tax year.
For example, to assess your qualifying income for the tax year 2026 to 2027, we’ll look at the tax return that you need to submit by 31 January 2026. This tax return is for the tax year 2024 to 2025.
You do not need to start using Making Tax Digital for Income Tax until after you submit your first Self Assessment tax return.
After you submit your return, we’ll check if your qualifying income is more than £30,000. If it is, we’ll tell you when you must start using Making Tax Digital for Income Tax.
If you’re already using Making Tax Digital for Income Tax and start a new business
You do not need to use Making Tax Digital for Income Tax for the new business until you submit a tax return which includes the income from that new business.
For example, you may start a new business in May 2026. Your first tax return that will include the income from this business will be the tax return for the 2026 to 2027 tax year, which you would need to submit by 31 January 2028. You would then need to use Making Tax Digital for Income Tax for this business from 6 April 2028.
However, you can choose to voluntarily use Making Tax Digital for Income Tax for the new business from when it starts.
If your accounting period is longer or shorter than 12 months
If we have the data, we’ll annualise your qualifying income.
For example, if you have become a sole trader but you’ve only been trading for 6 months in your first tax year, we’ll double your income to find out your qualifying income.
What’s included in your qualifying income
If you get income from a jointly owned property
Your share of the property income will count towards your qualifying income. For example, you:
- jointly own a property with your sibling which generates £50,000 in income
- both receive an equal share
- do not have any income from self-employment
In this example, your qualifying income would be £25,000.
If you jointly own a property and only receive notice of your share of the income after expenses have been deducted, then we’ll assess that figure for your qualifying income.
If you use the cash basis and are VAT registered
You can choose to include or exclude VAT when you declare your business income. If you include it, then it will count towards your qualifying income.
If you’re a beneficiary of a bare trust
Any property or trading income that you’re entitled to will count towards your qualifying income.
If you’re a beneficiary of an interest in possession trust
Any property or trading income that is paid directly to you and bypasses the trustees will count towards your qualifying income.
If the transactions in UK land rules apply
If your income is treated as profits of a trade under the transactions in UK land rules, it will count towards your qualifying income where it is a continuing income source over more than one tax year.
If you receive disguised investment management fees or income based carried interest
These forms of remuneration are treated as the profits of a deemed trade and will form part of your qualifying income.
What’s not included in your qualifying income
If you get income from a partnership
Income from a partnership does not count towards your qualifying income, unless you receive disguised investment management fees or income based carried interest.
If you’re impacted by basis period reform
You may have transition profits from previous tax years that will be assessed in the tax year 2024 to 2025 and the next 4 tax years. These profits will not count towards your qualifying income.
If you’re a carer that is eligible for qualifying care relief
The qualifying care receipts that you receive will not count towards your qualifying income.
How your tax residence affects your qualifying income
If you’re UK tax resident
Your qualifying income will include your:
- self-employment income
- UK and foreign property income
For example, you could:
- be a sole trader in the UK
- rent out a property in France
In this example, both income sources will contribute to your qualifying income.
If you’re not UK tax resident
Your qualifying income will include:
- UK property income
- self-employment income that you have declared in your UK Self Assessment tax return
If you have any income from a trade of dealing in or developing UK land, this will be included.
Foreign property income and income that you have not declared on your UK Self Assessment tax return will not contribute to your qualifying income.
For example, you could:
- be tax resident in Spain
- rent out a property in the UK
- be a sole trader in Spain
In this example, only your UK property income would contribute to your qualifying income.
After you work out your qualifying income
Once you’ve worked out your qualifying income, you can find out if and when you need to use Making Tax Digital for Income Tax.
Updates to this page
Published 16 October 2024Last updated 25 February 2025 + show all updates
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Guidance has been updated to clarify what sources of income do and do not count towards your qualifying income. Information has been added on how HMRC will assess your income based on your Self Assessment tax return and when your accounting period is longer or shorter than 12 months. Information has been added about what you need to do if you already use Making Tax Digital for Income Tax and you start a new business. What’s included in your qualifying income has been updated with information about income where transactions in UK land rules apply. What’s not included in your qualifying income has been updated with information about basis period reform. Information about tax residency has been updated to clarify what contributes to your qualifying income if you are UK tax resident and not UK resident.
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