Only gross property and self-employment income counts towards the Making Tax Digital threshold, added together before expenses. Your salary is ignored. The limit is £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028, tested on your tax return from two years earlier.
How the test works
HMRC adds up two things from your Self Assessment return: your gross rent, and your self-employed turnover. Both are counted before any expenses come off. Salary, pensions, dividends and savings interest are not part of the test.
It is an income test, not a profit test. A landlord with £52,000 of rent and £45,000 of costs has qualifying income of £52,000, not £7,000.
The year tested is not the current one. To decide who had to start in April 2026, HMRC looked at 2024/25 returns. April 2027 is decided by 2025/26 returns, and April 2028 by 2026/27 returns.
Worked examples
Salary plus rent. You earn £40,000 from a job and £15,000 in gross rent. Your qualifying income is £15,000, because the salary does not count. You are below all three thresholds.
Rent plus a side business. You have £32,000 of gross rent and £22,000 of self-employed turnover. Qualifying income is £54,000, so you are in scope from April 2026.
High rent, high costs. Gross rent is £45,000 and expenses are £30,000. You are under £50,000 now, but over £30,000, so you would be caught from April 2027 if your 2025/26 return shows it.
Joint owners. A flat brings in £64,000 a year, owned 50:50. Each owner counts £32,000. Neither is over £50,000, but both are over £30,000.
What being in scope means
You keep digital records in compatible software, send an update to HMRC every quarter, and file a final declaration instead of the old year-end return. Our guide to Making Tax Digital for Brighton landlords covers the deadlines and the software.
What to do now
- Pull out your 2024/25 and 2025/26 returns and find gross rent and self-employed turnover.
- Add them together and compare with £50,000, £30,000 and £20,000.
- If you are close to a threshold, work out which year's return will decide it.
- If you are in scope, choose software before the next quarterly deadline, not after it.
Common mistakes
- Using profit instead of gross income.
- Adding salary or dividends to the total.
- Forgetting self-employed turnover when you also let property.
- Assuming a jointly owned property counts in full for each owner.
- Assuming income through a limited company counts. It does not.
Sources: GOV.UK: find out if and when you need to use MTD for Income Tax
Frequently asked questions
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