Tax & compliance
What income counts toward the MTD £50,000 threshold?
By Kaiser Khan · Updated 17 July 2026
The basic rule
HMRC measures qualifying income as your gross income from self-employment and property — the top-line figures before any expenses are deducted. If the combined total exceeds the threshold, you are in MTD for Income Tax. This catches people whose profits are modest but whose turnover is high.
A worked example
Say you are a sole trader with £40,000 of turnover and you also receive £15,000 a year in rent from a buy-to-let. Your qualifying income is £55,000 — over the £50,000 line — so MTD applies to you from 6 April 2026 even though neither activity crosses the threshold alone. From April 2027 the same test runs against £30,000, and £20,000 from April 2028.
What does not count
Income taxed through PAYE — employment, occupational pensions — does not count toward qualifying income, and neither do dividends, savings interest or capital gains. Someone earning £80,000 in a job with a £10,000 side hustle is not caught yet; the side income alone is measured against the threshold.
If you are close to the line
HMRC assesses the threshold against your filed tax returns, so keep an eye on the trajectory, not just one year. If growth tips you over, you will get notice before you must join — but choosing software and tidying records early makes the switch far less painful.
People also ask
Is the threshold based on turnover or profit?
Turnover — gross income before expenses. Many people with £60,000 of turnover and £25,000 of profit assume they are safe; they are not, because the £50,000 test applies to the gross figure.
Do I combine two separate businesses?
Yes. Gross income from all your self-employed trades is added together, and property income is added on top. The combined figure is tested against the threshold.
Does my salary count toward the £50,000?
No. PAYE employment income is excluded from qualifying income — only gross self-employment and property income count.
This article is general information for UK businesses, not tax, legal, or financial advice, and thresholds change — confirm current rules on GOV.UK or with a qualified accountant before acting. Fee figures are indicative benchmarks from ourmethodology.