What qualifying income is

YourQualifying qualifyingincome is your total income incomefrom self‑employment and isproperty. This theis the totalamount before incomeexpenses (also youknown getas inturnover), abased on the tax yearreturn fromyou self-employmentsubmitted andin property.the previous tax year. Your total income may come from more than one source of self-employment or property income.

All other sources of income reported through Self Assessment do not count towards your qualifying income,income. suchOther assources of income from:include:

• employment (PAYE)
• your share of profit from a partnership as an individual partner 
• dividends (including those from your own company)
• a State Pension
• private pensions

Working out your qualifying income

HMRC will assess youryour qualifying gross income (incomefor beforea youtax deductyear by checking the Self expenses,Assessment tax alsoreturn calledthat youryou submitted in turnover).the previous tax year. You should also check your qualifying income yourself.

To assess your qualifying income for a tax year, we’ll look at the Self Assessment tax return that you submitted in the previous tax year.

For example, your gross income could be:

• £25,000 from rental income
• £27,000 from self-employment income

In this example, your total qualifying income would be £52,000.

If we review your return and find your income is above the relevant threshold, we will write to you confirming that you need to use Making Tax Digital for Income Tax by the start of the next tax year.

Ceased income sources

Ceasing a self-employment or property income source means that your business has stopped trading or you have stopped receiving income from property.

Ceasing a single self-employment or property income source

Self-employment or property income that has ceased since you submitted your last tax return will be included in your qualifying income, if you have another continuing source of self-employment or property income.

For example, youin maythe have2024 hadto 32025 differenttax sourcesyear ofyou were self-employed self-employmentand incomeowned onone yourproperty that you taxrented returnout. You forthen sold the 2024property, toceasing 2025your taxproperty year.income, and Ifincluded both income sources on oneyour of2024 theseto sources2025 ceased during that tax yearreturn. As but you continuecontinue to to receive incomeself-employment fromincome, the otherproperty 2 sources, the income received from the ceased source will still count towards your qualifying income.

If your qualifying income from self-employment or property (including income from ceased sources) is more than the relevant threshold, you’ll need to use Making Tax Digital for Income Tax.

Once you start using the serviceservice, andif your qualifying income drops below the relevant threshold for 3 tax years in a row, you can choose to opt out.

Ceasing all sources of self-employment or property income

If all your self-employment or property income sources have ceased since youyou submitted your submittedlast Self yourAssessment tax return, lastyou need Selfto tell AssessmentHMRC before the start of the next tax return,year. you:

• willIf notyou needdo tonot, you will need to use Making Tax Digital for Income Tax
• should tell HMRC

Tax.

IfWhen you havecontact anotherus, reasonwe towill submitupdate your records and send you a taxletter return,confirming you will stillnot need to completeuse oneMaking asTax normal.Digital for Income Tax.

Amendments

You tomust yourstill Selfsend Assessmenta tax return

for the relevant tax year by the deadline. This should show:

You

• the mayincome you received before all your self-employment or property income sources ceased
• any other income you need to makereport

If amendmentsyou need to yourchange Selfyour Self AssessmentAssessment tax taxreturn 

You returnmay afterneed youto change your Self haveAssessment tax submittedreturn it.after you submit it. 

HMRC will considerconsider changes to Self amendmentsAssessment tax to Self Assessment tax returns to check if they affect:affect: 

• your qualifying incomeincome 
• when you need to use Making Tax Digital for Income TaxTax 

Amendments

If thatyou make increasea change before the start of a tax year 

If the change takes your qualifying income above the relevant thresholdthreshold, afteryou thewill need to startuse ofMaking Tax Digital for Income Tax for the relevantupcoming tax yearyear.  

If the change takes your willqualifying notincome below the bethreshold, consideredyou will not need to foruse Making Tax Digital for Income Tax. 

If you make a change after the start of a tax year 

After the start of a tax year, if the change takes your qualifying income below the relevant threshold, you will not need to use Making Tax Digital for Income Tax for that tax year.  

If you have already signed up, you can continue using the service voluntarily or choose to opt out.  

Changes you make after the start of a tax year that take your qualifying income above the relevant threshold will not be considered for that tax year.

If your accounting period is longer or shorter than 12 months

If you are a sole trader, we’ll annualise your qualifying income if we have the information. This means we’ll work out what your qualifying income would be over a full tax year.

For example, if you have become a sole trader but you’ve only been trading for 6 months in your first tax year, we’ll double your income to find out your qualifying income.

If you receive income from property, you need to annualise your income yourself to work out your qualifying income.

What’s included in your qualifying income

If you get income from a jointly owned property

Your share of the property income will count towards your qualifying income. For example, you:

• jointly own a property with your sibling which generates £50,000 in income
• both receive an equal share
• do not have any income from self-employment

In this example, your qualifying income would be £25,000.

If you jointly own a property and only receive notice of your share of the income after expenses have been deducted, then we’ll assess that figure for your qualifying income.

If you use the cash basis and are VAT registered

You can choose to include or exclude VAT when you declare your business income. If you include it, then it will count towards your qualifying income.

If you’re a beneficiary of a bare trust

Any property or trading income that you’re entitled to will count towards your qualifying income.

If you’re a beneficiary of an interest in possession trust

Any property or trading income that is paid directly to you and bypasses the trustees will count towards your qualifying income.

If the transactions in UK land rules apply

If your income is treated as profits of a trade under the transactions in UK land rules, it will count towards your qualifying income where it is a continuing income source over more than one tax year.

If you receive disguised investment management fees or income-based carried interest

These forms of payment are treated as the profits of a specific trade and will count towards your qualifying income.

What’s not included in your qualifying income

If you have self-employment or property income alongside these sources, you could still beneed required to use Making Tax Digital for Income Tax.

If you get income from a partnership

Your share of profit from a partnership aspartnership as an individual partner doespartner does not count towards your qualifying income.  

You’ll needincome. You do not need to reportkeep yourdigital sharerecords of profit inor yoursend endquarterly ofupdates yearfor taxthis returntype through your compatible software, but you willof notincome. You will still need to createinclude digitalit recordsin or submit quarterlyyour updates fortax thisreturn incomeusing source. your compatible software.

Personal self-employment or property income that a partnership tells you about does count towards your qualifying income. This includes disguised investment management fees or incomeincome-based based carried interest. You will need to create digital records and submit quarterly updates for this income source.

If you’re impacted by basis period reform

You may have transition profits from previous tax years that will be assessed in the tax year 2024 to 2025 and the next 4 tax years. These profits will not count towards your qualifying income.

If you’re a carer who is eligible for qualifying care relief

You may receive qualifying care relief if you are a carer (such as a foster carer or a kinship carer) who looks after children or adults.

The qualifying care relief that you receive will not count towards your qualifying income.

If you receive qualifying care relief,relief, you youshould willread notthe needguidance toabout exemptions usefrom Making Digital for Income Tax before April 2027. You can find out if and when you need to use Making Tax Digital for Income Tax.

One-off transactions in UK land

If your income is treated as profits of a trade under the transactions in UK land rules, it will not count towards your qualifying income if it:

• it only falls within one tax year
• and therefore is not a continuing source

income source.

You should have recorded when the income source ceased on your tax return.

If you get income from UK Real Estate Investment Trusts (UK REITs) or Property Authorised Investment Funds (PAIFs)

Income from REITs or PAIFs will not count towards your qualifying income.

If you use averaging relief

Averaging relief does not affect your qualifying income, for example if you’re a farmer or creative artist.

How your tax residence in the 2024 to 2025 tax year affects your qualifying income

If you were a UK tax resident in the 2024 to 2025 tax year

To check your qualifying income, we’ll look at the Self Assessment tax return you submitted infor the 2024 to 2025 tax year. This will include your:

• self-employment income
• UK and foreign property income

For example, you could:

• be a sole trader in the UK
• rent out a property in France

In this example, both income sources will count towards your qualifying income.

If you were not a UK tax resident in the 2024 to 2025 tax year

To assess your qualifying income, we’ll look at the Self Assessment tax return you submitted infor the 2024 to 2025 tax year. Your qualifying income will include:

• UK property income
• self-employment income that you have declared in your UK Self Assessment tax return

If you have any income from a trade of dealing in or developing UK land, this will be included.

Foreign property income and self-employment income that you have not declared on your UK Self Assessment tax return will not count towards your qualifying income.

For example, you could:

• be tax resident in Spain
• rent out a property in the UK
• be a sole trader in Spain

In this example, only your UK property income would count towards your qualifying income.

IfYou youshould submitread the informationguidance about exemptions onfrom Making Tax Digital for Income Tax if you:  

• included the SA109 supplementary page forin your 2024 to 2025 tax returnreturn 

• did andnot expectinclude tothe doSA109 sosupplementary forpage in your 20262024 to 20272025 tax return, youbut willyou reasonably notexpect to needinclude toit usein theyour service2025 beforeto April2026 2027.or You2026 can find out if and when you need to use2027 Makingtax Tax Digital for Income Tax.return

After you work out your qualifying income

Once you’ve worked out your qualifying income, you can find out if and when you need to use Making Tax Digital for Income Tax.