Am I in for Making Tax Digital? Check your threshold

The answer comes down to a single figure, your qualifying income, and it is almost never the figure people expect. Pension, dividends, salary, savings: none of it counts. So before you read a word of the detail, put your numbers into the calculator and get your answer.

The rest of the page is for the worried reader: the one whose situation has changed, who has sold up, incorporated, started letting, or watched their income slip below the line and wants to know whether they are in, out, or stuck.

What the MTD threshold is

Making Tax Digital for Income Tax arrives in waves, set by your qualifying income. You're in scope if that income is over £50,000 (from 6 April 2026, live now), over £30,000 (from 6 April 2027), or over £20,000 (from 6 April 2028). The calculator above tells you which wave catches you.

The number HMRC looks at is gross, the money in before any costs come out. It is not your profit. A landlord on £52,000 of rent with £30,000 of costs has a qualifying income of £52,000, not £22,000, and is in the first wave. This is the single most common mistake, so it is worth saying plainly: check your gross figure, not the profit at the bottom of your return.

HMRC works out your figure from the last Self Assessment return you filed, and writes to you if you're over the line. If no letter arrives, you are still responsible for checking. The letter is a prompt, not the rule.

What counts as qualifying income

Qualifying income comes from two sources, and two only: UK property and self-employment. Add your gross rent to your gross self-employment turnover and that total is the figure that decides your wave. Several properties combine into one number. Self-employment turnover sits on top of your rent. The calculator does the adding for you.

A few less obvious cases count too, and they catch people out. If you let a property abroad and you're UK resident, that foreign rent counts. If a source of self-employment or property income stopped part-way through the year but you still have another continuing source, the income from the stopped source still counts for that assessment. And if you include VAT when you declare your business income, the VAT counts.

If your accounting period runs short, the figure gets annualised. HMRC does this for sole traders where it has the information (six months of trading gets doubled to find the yearly figure). For property income, you work the annualised figure out yourself.

What does not count

This is where the worry usually lives, especially for landlords in the first wave, who tend to be older and to have built up other income over a working life. So here it is in plain terms: your pension, whether State Pension or a private one, does not count. Neither do dividends, including dividends from your own company. Salary taxed through PAYE does not count. Savings interest and other investment income do not count. Partnership income does not count, for now.

That means you can have a six-figure total income and still be outside MTD, as long as your property and self-employment income stays under the line. A landlord with £40,000 of rent, a £30,000 pension and £15,000 of dividends has a qualifying income of £40,000, so they join in the second wave, April 2027, on the strength of the rent alone. The pension and dividends are simply not in the calculation.

A handful of property-related items are also left out: income from UK Real Estate Investment Trusts (REITs) or Property Authorised Investment Funds (PAIFs), and qualifying care relief if you're a foster or kinship carer. A genuinely one-off transaction in UK land, falling in a single tax year and not a continuing source, is excluded too.

Who is exempt

There is a difference between being under the threshold and being exempt. Most people who don't have to use MTD simply have a qualifying income of £20,000 or less, which is the calculator's "not in scope yet" result. Exemption is a narrower thing, and it falls into two groups.

Digitally excluded. You can apply for an exemption if it's not reasonable for you to use compatible software to keep or send digital records. HMRC gives examples: your age, a health condition or a disability that stops you using a computer, tablet or smartphone; being a practising member of a religious society whose beliefs are incompatible with digital records, where you don't use a device for business or personal use at all; or being unable to get internet access at home or business because of where you live, with no suitable alternative. HMRC decides case by case, and you apply rather than self-certify.

It will not accept an application where the only reason is that you previously filed on paper, that you're unfamiliar with software, that you have few records to create, or that signing up takes extra time or money. Those reasons on their own are not enough.

Automatically exempt. Some people are exempt without applying, and in fact cannot sign up. You're automatically exempt if you're filing as a trustee (including a charitable trustee or a trustee of a non-registered pension scheme), filing as the personal representative of someone who has died, a Lloyd's member in respect of your underwriting business, a non-resident company, or a person who has no National Insurance number on the 31 January before the tax year starts.

If you're exempt, you don't fall out of the tax system. You carry on reporting your income in a Self Assessment return as before.

When your situation changes

These are the questions that bring worried readers here, and the rules are easy to get subtly wrong, so each one below is taken from current GOV.UK guidance rather than memory. Meet Nigel, a higher-rate landlord with a small portfolio, whose circumstances keep shifting. His situations make the rules concrete.

I was in scope, but my income dropped below the threshold. Am I stuck in MTD?

No, but you can't leave the moment your income dips. Once you're using MTD, you can choose to opt out once your qualifying income has been below the relevant threshold for three tax years in a row. One quiet year doesn't release you; three consecutive years below the line does. Until then you carry on sending quarterly updates as normal.

So if Nigel's rent falls under £50,000 next year because he's between tenants, that single year changes nothing. If it stays under for three years running, he can then opt out. The rule is built so that a temporary dip doesn't bounce you in and out of the system year to year.

I sold my portfolio, or stopped letting. How do I leave MTD?

If every source of self-employment or property income has ceased since your last Self Assessment return, you don't need to use MTD, and you should tell HMRC. There's no waiting period here, because there's no income left to report. If you still have a reason to file a Self Assessment return (other income, a capital gain on the sale), you complete that as normal.

One nuance worth flagging. If only some of your income has stopped but you still have a continuing property or self-employment source, the income from the ceased source still counts towards your qualifying income at the next assessment. So Nigel selling one of three flats doesn't take him out; selling all of them, with nothing left to report, does.

I moved my properties into a limited company. Am I still in?

MTD for Income Tax is for individuals, not companies. A limited company pays Corporation Tax and reports separately, and there is no MTD for Income Tax obligation on the company. So once your properties are genuinely owned and let by the company rather than by you personally, that rental income leaves your qualifying income.

Whether that takes you out of MTD altogether depends on what's left in your own name. If incorporating means you no longer have any personal property or self-employment income, you tell HMRC your sources have ceased, as above. If you keep one or two properties personally, or have self-employment income, you're assessed on what remains. Incorporation is also a significant tax decision in its own right, with stamp duty and capital gains consequences, so it's worth proper advice before moving anything.

I moved to a partnership, or my income is in a partnership. Does MTD apply?

Not yet. Partnership income does not count towards your qualifying income at the moment, and partnerships are not in the current MTD for Income Tax rollout. HMRC has said business partnerships will need to use MTD for Income Tax in future, but has not set a date. So if Nigel's lettings run through a partnership, that income is outside MTD for now, and outside the threshold calculation.

Keep an eye on this one. "Not yet" is the operative phrase, and the timeline will be announced later.

I've just started letting, or just crossed the threshold. When do I join?

You don't join the instant your income crosses the line. HMRC checks your qualifying income from the Self Assessment return you filed in the previous tax year, and you start using MTD from the beginning of the next tax year if you're over. In HMRC's words, you don't need to start until after you've submitted your first Self Assessment return, though you can choose to sign up early.

So a brand-new landlord lets a property, files their first Self Assessment return covering that year, and if the qualifying income on it is over the threshold, comes into MTD from the following 6 April. There's a built-in lead time. One more detail: if you amend a return after the tax year has started in a way that pushes you over the threshold, that amendment won't pull you into MTD for that year.

What happens once you're in

Being in scope changes how you report, not how much you pay or when. You keep digital records, send a quarterly update to HMRC each quarter, then submit a final declaration after the tax year to settle everything. Quarterly updates are cumulative, each one running from 6 April, with deadlines of 7 August, 7 November, 7 February and 7 May. Your final declaration is due by 31 January after the tax year ends, the same date your Self Assessment return used to fall on. Payment dates (31 January and 31 July) don't move.

If you've just found out you're in, the practical next steps are to register and get set up, then learn the deadline rhythm. Both have their own page in this guide, linked below.

Where you go next depends on which wave caught you.