Many sole traders and landlords are still asking the same question: does Making Tax Digital for Income Tax apply to me yet?
The answer depends on your MTD qualifying income, and this is where many people get caught out. HMRC does not look at your profit. It looks at your gross income from self-employment and property before expenses are deducted.
That means someone who thinks they are safely below the threshold can still be brought into Making Tax Digital from 6 April 2026.
In this guide, we explain what qualifying income means, what counts towards it, what does not count, and what UK business owners and landlords should do now.
What Does “Qualifying Income” Mean for MTD?
For MTD for Income Tax, qualifying income is the total income you receive in a tax year from:
- self-employment
- property income
The key point is that HMRC looks at income before expenses.
So if you are a sole trader, landlord, or both, you need to total your gross business turnover and gross property income. You do not deduct allowable expenses first.
This is one of the most common misunderstandings we see. Many business owners look at their taxable profit and assume that is the figure HMRC uses. It is not.
Who Needs to Use MTD for Income Tax and When?
HMRC is introducing MTD for Income Tax in stages:
- From 6 April 2026, it applies to sole traders and landlords with qualifying income over £50,000.
- From 6 April 2027, it applies to those with qualifying income over £30,000.
- From 6 April 2028, it is due to extend to those with qualifying income over £20,000.
If you are checking whether you need to join from 6 April 2026, HMRC will normally look at the Self Assessment tax return you submitted for the 2024 to 2025 tax year.
How HMRC Works Out Your Qualifying Income
HMRC checks the income shown on the previous tax year’s Self Assessment return.
For example, if your 2024 to 2025 return shows:
- £27,000 self-employment income
- £25,000 property income
Your qualifying income is £52,000.
In that case, you would be required to use MTD for Income Tax from 6 April 2026.
Even if HMRC does not write to you, it is still your responsibility to check whether you need to use the service.
What Counts Towards Qualifying Income?
The following will usually count towards your MTD qualifying income:
- turnover from self-employment
- property income
- your share of income from jointly owned property
If you jointly own a rental property, only your share of the income counts towards your qualifying income.
For example, if a property brings in £50,000 and you own it equally with another person, your share would normally be £25,000.
What Does Not Count Towards Qualifying Income?
Some income sources reported on a tax return do not count towards the MTD threshold.
These commonly include:
- employment income under PAYE
- dividends, including dividends from your own limited company
- State Pension or private pension income
- your share of partnership profit as an individual partner
This matters because many directors assume their company salary and dividends will bring them into MTD for Income Tax. On their own, they do not. MTD for Income Tax is aimed at qualifying self-employment and property income.
Common Examples That Cause Confusion
1. Sole Trader Plus Landlord
If you run a business and also receive rental income, HMRC looks at the combined total.
Example:
- self-employment turnover: £35,000
- property income: £18,000
- total qualifying income: £53,000
This would put you into MTD for Income Tax from 6 April 2026.
2. Limited Company Director with Dividends
If all your income comes from salary and dividends from your own limited company, that does not by itself create MTD for Income Tax obligations.
However, if you also have self-employment income or property income, those figures may bring you into scope.
3. Jointly Owned Rental Property
You do not use the full rental income if only part of it belongs to you. You use your share.
That distinction can make a big difference if your income is close to the threshold.
4. Income Drops This Year
Some people assume they can ignore MTD if their current income has fallen.
In practice, HMRC generally looks at the previous tax return to decide when you need to start. So if your earlier return puts you over the threshold, you may still need to join from the relevant start date.
Why This Matters More Than People Realise
Getting your qualifying income wrong can lead to two problems.
First, you might assume MTD does not apply to you and leave preparation too late.
Second, you might worry unnecessarily because you are including income sources that do not actually count.
A proper review now can save a lot of confusion, especially if you have mixed income, jointly owned property, or income that sits near the threshold.
What Should You Do Now?
If you are unsure whether MTD for Income Tax applies to you, take these steps now:
- Review your most recently submitted Self Assessment return.
For April 2026 entry, this will usually be your 2024 to 2025 return. - Add together your gross self-employment and property income.
Use the income before expenses, not your profit. - Exclude income that does not count.
Do not assume PAYE income, dividends, or partnership profit automatically count towards the threshold. - Check whether your income is close to or above the threshold.
If it is, now is the time to prepare rather than waiting for a deadline letter. - Get your bookkeeping and software plan sorted early.
If you need to join MTD, you will need digital records and compatible software in place.
How AAR Certified Accountants Can Help
At AAR Certified Accountants, we help sole traders, landlords, directors, and growing businesses work out whether MTD applies and what they need to do next.
We can help you:
- review your qualifying income correctly
- spot income sources that do and do not count
- prepare your bookkeeping and software for MTD
- avoid last-minute mistakes and unnecessary stress
Not Sure Whether MTD Applies to You?
Not sure whether your income puts you into Making Tax Digital from 6 April 2026?
Book a consultation with AAR Certified Accountants today. We will help you check your position, clarify your obligations, and get prepared properly.
Disclaimer: This article is for general information only and does not constitute personalised tax advice. MTD rules depend on your circumstances, and HMRC guidance can change.