MTD for IT Qualifying Income: What You Need to Know

From April 2026, Making Tax Digital for Income Tax (MTD for IT) becomes mandatory for self-employed individuals and landlords earning over £50,000 in qualifying income. If you fall into this category, start preparing now, digital record-keeping and quarterly submissions are on the way.

What is Qualifying Income?

Qualifying income is the gross income you earn from self-employment (sole trader businesses) and/or property income (UK and overseas rental income).

How to Work Out Your Qualifying Income:

• Add together all gross business and property income for the tax year
• Do not deduct expenses
• If you have multiple businesses, combine their income
• For jointly owned property, only include your share
• If your accounting period is less than 12 months your income will need to be annualised when calculating your qualifying income

If you had multiple qualifying income sources in 2024/25 that together exceeded the MTD threshold of £50,000, and any one of these income sources have now ceased, you will still be required to submit quarterly MTD returns from 6 April 2026, even if your remaining income sources fall below the threshold. Your requirement to file MTD returns from 6 April 2026 only ceases if you have no remaining qualifying income sources at all (for example, if you have sold all properties and ceased all trades).

What’s not included:

• Partnership income – income from a partnership does not count towards qualifying income
• Basis period reform transition profits – transition profits assessed in 2024–25 and the following four tax years will not count towards qualifying income
• Any other income – such as employment income, pensions, savings, dividends, and one-off income remains outside qualifying income

Many individuals are unaware of the fact that falling into MTD is based upon ‘top-line’ earnings (e.g. turnover) rather than the bottom-line (net profits), and so MTD is expected to capture up to 3 million individuals.

We’re Here To Help

If you need assistance in determining your position for MTD, please contact your local Whitings LLP office and we’ll be happy to assist you.