What is qualifying income for Making Tax Digital?
Short answer
Qualifying income is your total income from self-employment and property before expenses, so turnover, not profit. HMRC takes it from the tax return of an earlier year. Wages, dividends, pensions and a partner's share of partnership profit do not count.
What counts
Per HMRC (GOV.UK):
- Turnover from self-employment, as a sole trader.
- Rent and other property income, before expenses.
- Your share of income from a jointly owned property.
- Self-employment or property income a partnership reports to you personally.
- Income from a source that stopped, if another self-employment or property source carries on.
What does not count
- Employment income taxed through PAYE.
- Your share of partnership profit as an individual partner.
- Dividends, including from your own company.
- The State Pension and private pensions.
- Income from UK REITs or PAIFs.
- Qualifying care relief, transition profits from basis period reform, and one-off UK land transactions within one tax year.
HMRC's examples
- £25,000 rent plus £27,000 self-employment: qualifying income £52,000.
- A property owned with your sibling earns £50,000, split equally, and you have no other self-employment: your qualifying income is £25,000.
If you are UK tax resident, foreign property income counts too. If you are not UK resident, only the UK property and self-employment income on your UK return counts.
Turnover, not profit
This trips people up. A landlord with £34,000 rent and £20,000 of mortgage interest and repairs has a profit of £14,000 but qualifying income of £34,000, so over the April 2027 threshold. Books kept by category answer the question at a glance. Octobooks keeps the books of UK sole traders and landlords and sorts every entry into the categories of the self-employment pages (SA103F) and the UK property pages (SA105). Its Making Tax Digital for Income Tax connection is built and runs end to end against HMRC's test service (the sandbox). Octobooks is not on HMRC's list of compatible software yet; we are working towards recognition. Until it is listed, send your updates and your return through a product that is on the list.
More questions
- Do I need Making Tax Digital from April 2027?
- Making Tax Digital for landlords: what changes in April 2027?
- Who is exempt from Making Tax Digital for Income Tax?