Work out your qualifying income for Making Tax Digital for Income Tax
Source: gov.uk (2025-11-24)

Find out what counts as qualifying income from self-employment and property when using Making Tax Digital for Income Tax.

What qualifying income is

Your qualifying income is the total income you get in a tax year from self-employment and property. Your total income may come from more than one source of self-employment or property income.

All other sources of income reported through Self Assessment do not count towards your qualifying income, such as income from:
- employment (PAYE)
- partnership or dividends (including those from your own company)
- a State Pension
- private pensions
Working out your qualifying income

HMRC will assess your gross income (also called your turnover) before you deduct expenses. You should also check your qualifying income yourself.

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, 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 we review your return and find your income is above the relevant threshold, we will write to you confirming that you are required to start using Making Tax Digital for Income Tax by the start of the next tax year.

We may not always have your latest income information. Even if you do not receive a letter, you must still check your qualifying income to find out if you need to use the service and sign up.

Ceased income sources

Self-employment or property income that has ceased since you submitted your last tax return will be included in your qualifying income, if you have another continuing source of self-employment or property income.

For example, you may have had 3 different sources of self-employment income on your tax return for the 2024 to 2025 tax year. If one of these sources ceased during that tax year but you continue to receive income from the other 2 sources, the income received from the ceased source will still count towards your qualifying income.

If your income from self-employment or property (including income from ceased sources) is more than the relevant threshold, you’ll need to use Making Tax Digital for Income Tax.

Once you start using the service and your qualifying income drops below the relevant threshold for 3 tax years in a row, you can choose to opt out (https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/if-your-circumstances-change).

If all your self-employment or property income sources have ceased since you submitted your last Self Assessment tax return, you will not need to use Making Tax Digital for Income Tax and you should tell HMRC. If you have another reason to submit a tax return, you will still need to complete one as normal.

Amendments to your Self Assessment tax return

You may need to make amendments to your Self Assessment tax return after you have submitted it.

HMRC will consider amendments to Self Assessment tax returns to check if they affect:
- your qualifying income
- when you need to use Making Tax Digital for Income Tax
Amendments that increase your qualifying income above the relevant threshold after the start of the relevant tax year will not be considered for Making Tax Digital for Income Tax for that tax year.

If your accounting period is longer or shorter than 12 months

If you are a sole trader, we’ll annualise your qualifying income if we have the information. 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.

If you receive income from property, you need to annualise your income yourself to work 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 payment are treated as the profits of a specific trade and will count towards your qualifying income.

If you use averaging relief

Averaging relief does not affect your gross income, for example if you’re a farmer or creative artist.

What’s not included in your qualifying income

If you have additional sources of self-employment or property income alongside these sources, you could still be required to use Making Tax Digital for Income Tax.

If you get income from a partnership

Income from a partnership does not count towards your qualifying income, however disguised investment management fees or income based carried interest do count towards your qualifying income.

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

You may receive qualifying care relief if you are a carer (such as a foster carer or a kinship carer) who looks after children or adults.

The qualifying care relief that you receive will not count towards your qualifying income.

If you’re not sure if you receive qualifying care relief, you can contact your local authority to check.

One off transactions in UK land

If your income is treated as profits of a trade under the transactions in UK land rules, it will not count towards your qualifying income if it:

only falls within one tax year

is not a continuing source

You should have recorded when the income source ceased on your tax return.

If you get income from UK Real Estate Investment Trusts (UK REITs) or a Property Authorised Investment Funds (PAIFs)

Income from REITs or PAIFs will not count towards your qualifying income.

How your tax residence affects your qualifying income

If you were a UK tax resident in the 2024 to 2025 tax year

To check your qualifying income, we’ll look at the Self Assessment tax return you submitted in the previous tax year. This 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 count towards your qualifying income.

If you were not a UK tax resident in the 2024 to 2025 tax year

To assess your qualifying income, we’ll look at the Self Assessment tax return you submitted in the previous tax year. 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 self-employment income that you have not declared on your UK Self Assessment tax return will not count towards 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 count towards your qualifying income.

If you submit information on the SA109 supplementary page for your 2024 to 2025 tax return and expect to do so for your 2026 to 2027 tax return, you will not need to use the service before April 2027.

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 (https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax).