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What counts as "qualifying income" for MTD (with examples)

By Paul · Last checked against GOV.UK on · How we check facts

This one number decides whether, and when, you join MTD for Income Tax. It's not your profit and it's not your total income.

The rule

HMRC defines qualifying income as your total income from self-employment and property before expenses (turnover), based on the tax return you sent for the relevant earlier year. Source: Work out your qualifying income, GOV.UK (updated 11 September 2026).

What's in, what's out

Counts

  • Self-employment turnover
  • UK and foreign property income
  • Your share of a jointly owned property's income
  • Often, income from a source that has since stopped (HMRC sets out when on GOV.UK)

Doesn't count

  • Wages from a job (PAYE)
  • Your share of partnership profit as a partner
  • Dividends, including from your own company
  • State Pension and private pensions
  • Qualifying care relief (foster and kinship carers)

Worked examples

The side-hustle electrician. Salary £38,000 from a job, plus £24,000 of weekend electrical work in 2025 to 2026. Qualifying income is £24,000, because wages don't count. That's not over £30,000, so not April 2027. If 2026 to 2027 is also over £20,000, it's April 2028.

HMRC's own example. £25,000 rental income plus £27,000 self-employment income gives qualifying income of £52,000.

Joint landlord. HMRC's example: you and your sibling share a property earning £50,000 and you have no self-employment. Your qualifying income is £25,000.

New sole trader. If you only traded for part of the year, HMRC says it will "annualise": six months of trading means it doubles your income to estimate a full year. Landlords must annualise property income themselves.

Common traps

  • Using profit instead of turnover. A builder taking £45,000 with £20,000 of materials still has qualifying income of £45,000.
  • Forgetting to add rent to trading income. They're added together.
  • If you're VAT registered and use the cash basis, you can include or exclude VAT in income. If you include it, it counts.
  • Stopping trading without telling HMRC. If all your self-employment and property income has stopped, HMRC says to tell it before the next tax year starts. If you don't, you'll still be expected to use MTD.

Once you're in, you stay in until your qualifying income has been under the threshold for three tax years in a row. Then you can choose to leave (GOV.UK).

Try your numbers in the free checker.

Sources

We checked each of these on GOV.UK on 3 November 2026. If HMRC changes them, this page will change too.

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This page is general information, not tax advice. Read why. Page history: 3 November 2026, full check against GOV.UK.