MTD for IT Qualifying Income: What You Need to Know

25th November 2025

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.