MTD Learning Centre
What is qualifying income for Making Tax Digital? (It isn't your profit)
What is qualifying income?
Qualifying income is the figure HMRC uses to decide whether Making Tax Digital for Income Tax applies to you. It is your gross income from self-employment and property, before you take off any expenses.
That last part is where most people get caught out. It is not your profit. It is not what lands in your bank account after materials, fuel, tools and everything else. It is the total that came in.
If you turned over £62,000 last year and £20,000 of that went on expenses, your qualifying income is £62,000, not £42,000.
Self-employment and property income are added together
HMRC adds them up. In their own worked example, £25,000 of rental income plus £27,000 of self-employment income gives total qualifying income of £52,000.
Neither figure on its own is anywhere near £50,000. Together they are over it. If you drive a van during the week and let out a flat, you need to add both before deciding whether this applies to you.
What does not count towards qualifying income?
PAYE employment income, pensions, savings interest, dividends and capital gains do not form part of qualifying income. A few specific exclusions are listed in HMRC guidance.
What are the thresholds?
If your qualifying income was over £50,000 for the 2024 to 2025 tax year, you should have started using Making Tax Digital for Income Tax from 6 April 2026. Lower thresholds follow in later years.
HMRC also explains exemptions, including automatic exemption if your qualifying income is £20,000 or less.
How does HMRC work out your figure?
HMRC assesses your qualifying income by looking at your Self Assessment return from the previous tax year. No letter is not the same as no obligation.
How do I check my own position?
HMRC has a tool that walks you through it. If your situation is complicated, ask your accountant. TidGo does not give tax advice.
The one thing worth doing today
Keep your income and expense records digitally as they happen. That's the part TidGo is built for: receipts and income proof collected as you go, in eight languages, ready to hand over.