What counts as qualifying income for Making Tax Digital, and what does not?

Making Tax Digital for Income Tax is UK-wide: it applies across England, Wales, Scotland and Northern Ireland, not as a devolved landlord rule. The practical threshold test is narrower than total taxable income, because it focuses on self-employment and property income.

What counts as qualifying income for Making Tax Digital, and is it gross or net?

Qualifying income for Making Tax Digital is normally gross income before expenses, but if your tax return is not required to show a before-deductions figure, the after-expenses net figure is used instead. The regulations define qualifying income as income from each relevant activity required on the person’s return, and say the amount is “the amount included in the return before any deductions,” or, where that is not required, “the amount included in the return after deductions.” For an MTD qualifying income calculator, this means adding gross self-employment income and gross property income unless the return only gives HMRC a net share; HMRC gives the joint-owner landlord example: “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.” Qualifying income is therefore not always the same as turnover, although for many sole traders and landlords it will be the gross turnover figure. Abodient can track rent, expenses and tax-return figures across a landlord portfolio, which matters because the threshold depends on the income figure HMRC sees.

Does your salary, pension or savings interest count towards the threshold?

Salary, pension income and savings interest do not count towards the Making Tax Digital threshold, even if those amounts plus your rental income take you over £50,000. Abodient’s AI assistant is useful here because a landlord can ask about their own portfolio, UK legislation or tax, and it reads their own data to help separate the rental figures from income that is not part of the MTD threshold test. The statutory test is built around a “relevant activity”, meaning an activity taxable under ITTOIA 2005 Part 2 or Part 3, and HMRC states the practical rule more simply: “All other sources of income do not count towards your qualifying income.” That answers the common day-job example: if your salary from employment plus rent exceeds £50,000, your salary does not push you into MTD; the threshold is based on your qualifying property and self-employment income. PAYE wages, State Pension, private pensions, dividends and bank interest may still matter elsewhere on your tax return, but they are not qualifying income for deciding whether you must keep MTD Income Tax records and submit quarterly updates.

Does income from a partnership count towards Making Tax Digital?

A partner’s share of partnership profit does not count towards their personal Making Tax Digital qualifying income, but personal self-employment or property income that the partnership separately reports to that person does count. The legislation excludes “any activity carried on in partnership” from the individual’s relevant activity, and HMRC states: “Your share of profit from a partnership as an individual partner does not count towards your qualifying income.” HMRC then gives the matching inclusion rule: “Personal self-employment or property income that a partnership tells you about does count towards your qualifying income.” Partnerships themselves are not currently brought into MTD Income Tax, because HMRC says: “Partnerships do not currently need to use Making Tax Digital for Income Tax.” So the dividing line is not whether money came via a partnership document; it is whether it is partnership profit share, which is excluded, or your own property or self-employment income, which is included.

How does Making Tax Digital work for a jointly owned property?

For a jointly owned property, each owner counts only their own share of the rental income for Making Tax Digital, not the total rent from the whole property. Abodient helps with that split because its finance records include ownership shares between joint owners, keeping the rent, expenses and tax-return figures aligned to the share each landlord needs to understand for the quarterly cycle. HMRC states: “Your share of the property income will count towards your qualifying income,” and its record-keeping rule is equally personal: “You only need to create digital records that relate to your share of income and expenses from your jointly let properties.” Joint letting is not automatically a partnership, because HMRC’s Property Income Manual says: “Joint letting does not, of itself, make the activity a partnership.” Married couples and civil partners living together are generally taxed on equal shares, but that is not fixed: ITA 2007 treats them as entitled “in equal shares,” while Form 17 can be used “to change the split of income to your actual share of ownership.” Co-owners do not have to link their digital records to each other, and one owner can be in MTD while another remains outside it.

Sources

• Income Tax (Digital Obligations) Regulations 2026, regulation 25 — “A relevant person’s qualifying income for a tax year is the sum, determined in accordance with regulation 26, of the amounts of income, from each relevant activity carried on by the person in that tax year, required to be included in the person’s return for that tax year.” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 26 — “(i)the amount included in the return before any deductions, or” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 26 — “(ii)if the person is not required to include in the return the amount of income from the relevant activity before any deductions, the amount included in the return after deductions;” Source
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax — “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.” Source
• Finance Act 2026, section 256 — “A ‘relevant activity’, in relation to a person, means any activity which may give rise to profits or other income for which the person would be liable to income tax chargeable under Part 2 or Part 3 of ITTOIA 2005 if the person were UK resident.” Source
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax — “All other sources of income do not count towards your qualifying income.” Source
• Finance Act 2026, section 256 — “(a)any activity carried on in partnership;” Source
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax — “Your share of profit from a partnership as an individual partner does not count towards your qualifying income.” Source
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax — “Personal self-employment or property income that a partnership tells you about does count towards your qualifying income.” Source
• HMRC, Find out if you can get an exemption from Making Tax Digital for Income Tax — “Partnerships do not currently need to use Making Tax Digital for Income Tax.” Source
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax — “Your share of the property income will count towards your qualifying income.” Source
• HMRC, Create digital records for Making Tax Digital for Income Tax — “You only need to create digital records that relate to your share of income and expenses from your jointly let properties.” Source
• HMRC Property Income Manual PIM1035 — “Joint letting does not, of itself, make the activity a partnership.” Source
• Income Tax Act 2007, section 836 — “The individuals are treated for income tax purposes as beneficially entitled to the income in equal shares.” Source
• HMRC Form 17 — “Use this form if you want to change the split of income to your actual share of ownership.” Source
• HMRC, Create digital records for Making Tax Digital for Income Tax — “If you are a landlord that jointly lets a property, you do not need to link your digital records to the records of the other landlord.” Source
• Explanatory Memorandum to the Income Tax (Digital Obligations) Regulations 2026 — “The extent of this instrument (that is, the jurisdiction(s) which the instrument forms part of the law of) is the United Kingdom.” Source