The £50,000 MTD threshold: turnover, not profit
The number that decides whether Making Tax Digital applies to you is your turnover, not your profit. HMRC calls it "qualifying income", and it is your gross income from self-employment and property added together, before a single expense comes off. That catches people out in one direction only: sole traders with healthy turnover and modest profit are over the line and don't know it.
What HMRC actually measures
gov.uk defines it in two sentences. "Your qualifying income is the total income you get in a tax year from self-employment and property." And on how it's assessed: "HMRC will assess your gross income (income before you deduct expenses, also called your turnover)."
Expenses never enter the test. Neither does the profit figure your tax bill is worked out from. The threshold question is simply: what did the work bring in?
The trap, in numbers
A groundworker turns over £56,000 in the 2024-25 tax year. Materials, the van, insurance and tools come to £24,000, so the profit is £32,000.
- For Income Tax, the £32,000 profit is what gets taxed.
- For the MTD threshold, the £56,000 turnover is what counts. That's over £50,000, so MTD applied from 6 April 2026.
Same business, two different numbers doing two different jobs. Judging your MTD position by your profit is the single most common way to get it wrong.
It adds up across everything you do
Qualifying income sums your self-employment and property income. gov.uk's own example: £25,000 of rental income plus £27,000 of self-employment income is £52,000 of qualifying income, over the £50,000 line, even though neither source is over it alone. A side property is exactly how people get pulled in early.
Jointly owned property counts at your share: a 50% share of £50,000 in rents adds £25,000 to your total.
What doesn't count
gov.uk lists what stays out of qualifying income: employment income under PAYE, a partnership share of profit, dividends (including from your own company), the State Pension and private pensions. A £45,000 salary plus £10,000 of self-employment doesn't put you over the £50,000 line, because only the £10,000 counts.
The threshold ladder
Each start date tests an earlier tax year, read from the tax return you already filed:
| Qualifying income over | In the tax year | MTD starts |
|---|---|---|
| £50,000 | 2024-25 | 6 April 2026 |
| £30,000 | 2025-26 | 6 April 2027 |
| £20,000 | 2026-27 | 6 April 2028 |
HMRC writes to people it believes are over the line, but gov.uk is clear that "if you do not receive a letter, it is still your responsibility to check". The checker asks four questions and gives you your start date.
Quick answers
Is the MTD threshold based on profit?
No. HMRC assesses your gross income, which gov.uk describes as "income before you deduct expenses, also called your turnover". Profit never enters the threshold test.
My turnover is £60,000 but my profit is £25,000. Am I in?
Yes, once your start date arrives. £60,000 of qualifying income was over the £50,000 line for 2024-25, which brought people in from 6 April 2026. The £25,000 profit decides your tax bill, not whether MTD applies.
Does my employed (PAYE) salary count?
No. Employment income, a partnership share, dividends, the State Pension and private pensions all stay out. Only self-employment and property income count, added together.
Which tax year does HMRC look at?
Each start date tests an earlier year: over £50,000 in 2024-25 meant 6 April 2026, over £30,000 in 2025-26 means 6 April 2027, and over £20,000 in 2026-27 means 6 April 2028.
Know your numbers before HMRC's letter does
SoleTax keeps your income and expenses straight as they happen, so your turnover, your profit and the tax to set aside are always on screen. 14 days free, no card needed.
Join the betaSources: gov.uk, work out your qualifying income for Making Tax Digital for Income Tax (updated 29 January 2026); find out if and when you need to use Making Tax Digital for Income Tax (updated 26 March 2026). Checked on 8 July 2026.