How qualifying income is calculated
Add gross self-employment income to gross property income. Do not deduct expenses. Do not add wages.
Key takeaways
- Gross, before expenses and tax.
- Self-employment plus property.
- PAYE wages, dividends, partnership profit share and pensions do not count toward the threshold.
- £45,000 of wages plus £6,000 of rent is £6,000 for this test.
The sum
GOV.UK defines qualifying income as the total gross income from self-employment and property in a tax year, before expenses or tax. Employment income, a share of partnership profit, dividends and pensions are listed as income that does not count toward qualifying income.
Worked example: £45,000 of wages and £6,000 of gross rent. The wages drop out. The qualifying income is £6,000. That figure is under £20,000, so on its own it does not meet the published thresholds.
Three patterns
A landlord with £30,000 of gross rent and no self-employment is over the 2025 to 2026 line if that rent is the 2025 to 2026 figure. They are not automatically in the April 2026 group unless the 2024 to 2025 figure was over £50,000.
A sole trader is tested on gross self-employment takings, not on the profit after costs. A person with both rent and a trade adds the two gross amounts.
Sources
- GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
- GOV.UK: Use Making Tax Digital for Income Tax
- GOV.UK: Get ready for MTD, an agent toolkit
- GOV.UK: Reduction of the mandation threshold from £30,000 to £20,000 from April 2028
- GOV.UK: Find software that's compatible with Making Tax Digital for Income Tax
- GOV.UK: Repossessing your privately rented property after 1 May 2026
- GOV.UK: Renting out your property, guidance for landlords and letting agents
Reviewed by
Christopher Norton
UK Property Tax & Making Tax Digital Specialist
FCCA and Chartered Tax Adviser. Director of Norton and Sons Associates Property Tax Firm. Property tax and MTD compliance since 2005.