Making Tax Digital – Working out your qualifying income

Your qualifying income is the total income that you get in a tax year from self-employment and property. We assess your gross income (also called your turnover) before you deduct expenses.

To assess your qualifying income for a tax year, we will look at the tax return that you had to submit the year before. For example, to assess your qualifying income for the tax year 2026 to 2027, we will look at the tax return you submitted for the tax year 2024 to 2025. This tax return should have been submitted by 31 January 2026.

All of your qualifying income must be reported through software that works with Making Tax Digital for Income Tax.

If your accounting period is longer or shorter than 12 months, and we have the necessary data, we will annualise your qualifying income. For example, if you have become a sole trader, but you have only been trading for 6 months in your first tax year, then we will double your income to find your qualifying income.

What’s included in your qualifying income

If you get income from more than one source

Income from all relevant sources will count towards your qualifying income. For example, your gross income (income before you deduct expenses) 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 you get income from a jointly owned property

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

• jointly own a property with your sibling which generates £50,000 in income
• both receive an equal share
• 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 will assess that figure for your qualifying income.

If you are a carer that is eligible for qualifying care relief

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

If you get income from a partnership

Income from a partnership does not count towards your qualifying income, unless you receive disguised investment management fees or income based carried interest.

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

These forms of remuneration are treated as the profits of a deemed trade and will form part of your qualifying income.

If you are a beneficiary of a bare trust

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

If you are 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.