Your qualifying income determines whether you must sign up for MTD. HMRC defines qualifying income as the total gross income you receive from all  self-employment and property sources combined, before deducting any expenses, allowances, or reliefs. 

What Counts as Qualifying Income

You must include all relevant property and self-employment income reported through your Self-Assessment tax return. This includes:

• Residential rental income;
• Commercial property income;
• Furnished holiday let income
• Overseas property income
• Income from self-employment or sole trading 

What Does Not Count Towards Qualifying Income

Certain income sources do not form part of your qualifying income for MTD. These include:

• Income received through PAYE
• Partnership income ( although partnerships may be brought into MTD at a later stage)
• Dividend income 
• State pension and private pension income

These are still taxable, but they are not included when calculating your qualifying income threshold for MTD purposes. 

Why Qualifying Income Matters

Your total qualifying income determines when you must start using MTD:

• From 6 April 2026, if your qualifying income exceeds £50,000
• from 6 April 2027, if your qualifying income exceeds £30,000
• From 6 April 2028, if your qualifying income exceeds £20,000

If your qualifying income falls below these thresholds, you are not required to join MTD yet, but you may opt in voluntarily to take advantage of digital record-keeping tools and simplify your tax management. 

If you are unsure about calculating qualifying income, please seek specialist advice or refer to the government guidance – Work out your qualifying income for Making Tax Digital for Income Tax - GOV.UK.