Where the qualifying income figure comes from
Qualifying income is the total income from self-employment and property before expenses. In practice HMRC uses turnover, not profit, and takes the figure from the tax return submitted in the previous tax year.
Add self-employment income and property income together before testing the threshold. All UK properties are treated as one UK property business, and all foreign properties are treated as one foreign property business.
| Tax year tested | Threshold | MTD for Income Tax starts |
|---|---|---|
| 2024-25 | More than 50,000 pounds | 6 April 2026 |
| 2025-26 | More than 30,000 pounds | 6 April 2027 |
| 2026-27 | More than 20,000 pounds | 6 April 2028 |
The thresholds are set in law by SI 2026/336 regulation 27, in force 1 April 2026.
What counts towards qualifying income
The test uses self-employment income and property income before expenses. That means turnover, not the profit left after expenses. Add the two together before you compare the total with the threshold.
- Self-employment income before expenses.
- Property income before expenses.
- All UK properties added together as one UK property business.
- All foreign properties added together as one foreign property business.
Do not deduct expenses when you work out the qualifying income figure. The threshold test is on income, not profit.
What does not count
Some income is outside the qualifying income test. This matters if you have several income sources, because a large PAYE salary or a pension does not push you over the MTD for Income Tax threshold.
- Employment income through PAYE.
- A partnership share as an individual partner.
- Dividends.
- State and private pensions.
- Qualifying care relief.
- Basis period reform transition profits.
- One-off transactions in UK land in a single tax year.
Partnerships are not in scope yet, and no date has been published. If you are an individual partner, your partnership share is not counted towards your qualifying income.
Worked examples for a sole trader, a landlord and both
These examples use only the threshold figures to show how the test works. They are illustrations, not tax advice.
- Sole trader: previous return shows self-employment turnover of exactly 50,000 pounds and no property income. Against the 2024-25 threshold, qualifying income is 50,000 pounds. The threshold is more than 50,000 pounds, so exactly 50,000 pounds is not over it.
- Landlord: previous return shows property income of exactly 30,000 pounds from UK properties and no self-employment income. Against the 2025-26 threshold, qualifying income is 30,000 pounds. The threshold is more than 30,000 pounds, so exactly 30,000 pounds is not over it.
- Both: previous return shows self-employment turnover of 30,000 pounds and property income of 20,000 pounds. Against the 2026-27 threshold, add the two figures to get 50,000 pounds. The threshold is more than 20,000 pounds for 2026-27, so 50,000 pounds is over it.
In each case the figure is turnover before expenses. The same rule applies whether the income comes from one trade, one property business, or a mix of both.
The exemption at 20,000 pounds or less
Qualifying income of 20,000 pounds or less is an automatic permanent exemption. That applies to the total of self-employment income and property income before expenses.
Where software fits in
Qualifying income is worked out by HMRC from the tax return, so software does not change how the test works. For MTD for Income Tax, compatible software must create and store digital records, work with the chosen accounting period and send the quarterly updates. An all-in-one product also submits the tax return.
TradeKit keeps digital records, sends quarterly updates and submits the tax return, with CIS and VAT in one app. TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS).