Whether you have to use Making Tax Digital for Income Tax (MTD) depends on one number: your qualifying income. For landlords it is easy to get wrong, because it is based on your rent before expenses, not your profit. This guide explains what counts, what does not, and how HMRC works it out, using the examples on gov.uk.
This is general information, not tax advice. The rules are on the gov.uk page work out your qualifying income. Check it, and speak to an accountant if your situation is not straightforward.
The short answer
Qualifying income is your total income from self-employment and property, before expenses. HMRC sometimes calls this turnover. It is taken from the Self Assessment tax return for the tax year two years before the MTD start date.
| MTD start date | Qualifying income over | Return HMRC looks at | Status |
|---|---|---|---|
| 6 April 2026 | £50,000 | 2024-25 | In force |
| 6 April 2027 | £30,000 | 2025-26 | Legislated, not yet commenced |
| 6 April 2028 | £20,000 | 2026-27 | Legislated, not yet commenced |
Source: find out if and when you need to use MTD and SI 2026/336.
Gross, not net
Mortgage interest, repairs, insurance and agent fees all come off your profit, but none of them comes off your qualifying income. Here is an illustrative example, not taken from gov.uk:
- Annual rent from two flats: £32,000.
- Expenses, including mortgage interest: £18,000.
- Profit: £14,000.
- Qualifying income: £32,000.
On those figures, the landlord would be over the £30,000 threshold due to start on 6 April 2027, even though the profit is well under it.
What counts
- Rent from UK property, before expenses.
- Income from overseas property, if you were UK tax resident. Gov.uk's example is a UK sole trader who also rents out a property in France: both count.
- Self-employment income, before expenses, added to your property income. Gov.uk's example is £25,000 of rental income plus £27,000 of self-employment income, giving qualifying income of £52,000.
- Your share of a jointly owned property. Gov.uk's example is a property that brings in £50,000, owned equally with a sibling: your qualifying income is £25,000. If you are only told your share after expenses, HMRC uses that figure.
- Income from a source that has stopped, such as a property you sold, if you still have another continuing self-employment or property income source.
What does not count
- Employment income taxed through PAYE.
- Your share of profit from a partnership, as an individual partner.
- Dividends, including from your own company.
- The State Pension and private pensions.
- Income from UK Real Estate Investment Trusts (REITs) and Property Authorised Investment Funds.
These may still need to go on your tax return, but they do not push you over the MTD threshold.
A few special cases
- You let for part of the year. If your property income covers less than 12 months, gov.uk says you need to annualise it yourself, that is, work out what it would be over a full year.
- You were not UK resident. Only your UK property income and any self-employment income on your UK return count. Some people who file the residence pages (SA109) are exempt for now, so check the exemptions guidance.
- You changed your tax return. HMRC will consider whether an amendment affects your qualifying income and start date.
- All your property and self-employment income stopped before 6 April 2026. You will not need to use MTD, but tell HMRC if your return does not already show it.
HMRC's letter, and your responsibility
HMRC checks your return and writes to you if your income is over the threshold. The gov.uk guidance is clear that even if you do not get a letter, you must still check your qualifying income yourself and sign up if you need to.
Can you leave MTD later?
Once you are in, you can choose to opt out if your qualifying income is at or below the threshold for three tax years in a row. The regulations apply this to tax years after 2028-29.
If your qualifying income is £20,000 or less, you are exempt. Other exemptions cover, for example, people without a National Insurance number and people who cannot reasonably use software because of age, health, disability or lack of internet access.
FAQ
Is MTD qualifying income based on rent or profit?
Rent. Qualifying income is your gross property income before expenses, plus any self-employment income before expenses.
Do joint landlords count the whole rent?
No. Only your share of the income from a jointly owned property counts towards your qualifying income.
Does my salary count towards MTD qualifying income?
No. Employment income through PAYE does not count, and neither do dividends, pensions or your share of a partnership's profit.
Which tax year does HMRC use?
The tax return for the tax year two years before the start date. For example, your 2025-26 return decides whether you start on 6 April 2027.
Does overseas rental income count?
Yes, if you were UK tax resident. If you were not UK resident, only your UK property income and self-employment income on your UK return count.
Next steps
For what happens once you are in, including quarterly update dates and penalties, read our guide to Making Tax Digital for landlords.
The Ashlar Ledger MTD landlord record keeper is coming soon. It includes a scope guide that helps you estimate your own qualifying income, including your share of joint lets. It is a guide, not a ruling, and the workbook does not send anything to HMRC. View the MTD Landlord Record Keeper
This is not tax advice. Figures checked against official sources on 10 November 2026. Ashlar Ledger: figures you can build on.