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 that you get in a tax year from self-employment and property.
We assess your gross income (also called your turnover) before you deduct expenses.
To assess your qualifying income for a tax year, we will look at the tax return that you had to submit the year before.
For example, to assess your qualifying income for the tax year 2026 to 2027, we will look at the tax return you submitted for the tax year 2024 to 2025. This tax return should have been submitted by 31 January 2026.
All of your qualifying income must be reported through software that works with Making Tax Digital for Income Tax.
If your accounting period is longer or shorter than 12 months, and we have the necessary data, we will annualise your qualifying income. For example, if you have become a sole trader, but you have only been trading for 6 months in your first tax year, then we will double your income to find your qualifying income.
All other sources of income reported through Self Assessment, such as income from employment, a partnership, or savings, do not count towards your qualifying income. You will need to report income from these sources using either your:
- Making Tax Digital compatible software (if it has the functionality)
- HMRC online services account
What’s included in your qualifying income
If you get income from more than one source
Income from all relevant sources will count towards your qualifying income. 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.
If you get income from a jointly owned property
Your share of the property income will count towards your qualifying income. For example, you could:
- jointly own a property with your sibling which generates £50,000 in income
- both receive an equal share
- 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 will assess that figure for your qualifying income.
If you are a carer that is eligible for qualifying care relief
The qualifying care receipts that you receive will not count towards 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 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.
If you are a beneficiary of a bare trust
Any property or trading income that you are entitled to will count towards your qualifying income.
If you are 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.
How residence and domicile affect your qualifying income
You can find out more about residence, domicile and the remittance basis and the deemed domicile rules.
If you are resident and domiciled in the UK
Your income from foreign property or foreign self-employment will count towards your qualifying income.
For example, you could:
- be a sole trader in the UK
- rent out a property in another country
If you are resident and domiciled in the UK, both income sources will contribute to your qualifying income.
If you are deemed domiciled in the UK
Income from foreign property or foreign self-employment will count towards your qualifying income, if you are treated as UK domiciled for that tax year.
If you are remitting foreign income from a year in which the remittance basis applied to you, that income will not count towards to your qualifying income.
If you are resident or domiciled outside of the UK
Only income from UK self-employment and UK property will count towards your qualifying income. You do not need to use Making Tax Digital for Income Tax for your foreign income.
For example, you could:
- be domiciled in France
- rent out a property in France
- run a business in the UK
Only your UK self-employment income would contribute to your qualifying income.
We will ask you to confirm your domicile status when you sign up for Making Tax Digital for Income Tax.
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.