What counts as qualifying income?
Broadly, your qualifying income is your total gross income (before expenses) from self-employment and/or UK property in a tax year. HMRC uses this figure — not your profit — to decide whether Making Tax Digital for Income Tax applies to you and from which date. The exact threshold has changed over time, so always check the current figure on HMRC's own page rather than relying on a number written here.
Regulatory information about Making Tax Digital for Income Tax, which applies to qualifying individuals with self-employment or property income — not to every business. It is not a description of Quarter Day's launch scope.
Gross income, not profit
This trips a lot of people up: qualifying income is measured before you deduct expenses. A sole trader with £40,000 in sales and £30,000 in costs has £40,000 in qualifying income for this test, not £10,000 profit.
Self-employment and property are combined
If you're both self-employed and a landlord, HMRC adds your self-employment income and your property income together to reach your total qualifying income — it isn't assessed separately per source. See our guide on combining self-employment and property income for how that plays out in practice.
A landlord with £18,000 in gross rental income and a small consulting sole trade bringing in £9,000 in gross fees would have combined qualifying income around £27,000 for this test — not their net profit after expenses.
Which tax year counts
HMRC generally looks back at a completed tax year's income (reported through your Self Assessment return) to decide whether you're brought into MTD for Income Tax from a later date. The exact look-back mechanics and phase-in dates are set by HMRC and do change — this is exactly the kind of detail to confirm on their guidance page rather than assume.
Frequently asked
Does qualifying income include my spouse or partner's income?
No — the qualifying income test is based on your own individual income from self-employment and property, not a household or joint figure.
What if my income moves up and down each year?
HMRC's rules generally look at completed tax years, so a year where you dip below the threshold can affect your obligations going forward. Check HMRC's guidance for how this is currently handled.
Does employment income (PAYE) count toward qualifying income?
No. The qualifying income test is specifically about self-employment and UK property income — ordinary employment income taxed through PAYE is not part of this calculation.
Read HMRC's official guidance ↗
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