Tools / Is MTD based on turnover or profit?
Short answer: turnover. HMRC calls it qualifying income and it means your gross income before you take a single expense off.
Making Tax Digital for Income Tax is based on gross income, not profit. HMRC calls the figure your qualifying income, and it is the total of your property and self-employment income measured before any expenses are deducted. A landlord receiving £55,000 of rent with £40,000 of costs has qualifying income of £55,000, not £15,000, and is in scope from April 2026.
This is the single most common misunderstanding about MTD, and it matters because the gap between the two numbers is often enormous. A leveraged landlord can have a five-figure turnover and almost no profit, and still be mandated.
| Amount | Counts towards MTD? | |
|---|---|---|
| Rent received | £55,000 | Yes, all of it |
| Letting agent fees | £5,500 | No |
| Mortgage interest | £26,000 | No |
| Repairs and insurance | £8,500 | No |
| Profit | £15,000 | Not the test |
| Qualifying income | £55,000 | Over £50,000, so in scope |
That landlord makes £15,000 and is mandated from April 2026. Someone with a £45,000 salary and £15,000 of rent is not, because employment income does not count at all.
Both sources are added together. Someone with £30,000 of rent and £25,000 of freelance turnover has qualifying income of £55,000 and is in scope from April 2026, even though neither source crosses the threshold alone.
If a letting agent pays you net of commission, use the gross rent, not what landed in your account. A statement showing £1,000 rent, £100 commission and a £900 payout is £1,000 of income with £100 of expense, not £900 of income. That distinction runs through your SA105 as well, where the gross goes in box 20 and the commission in box 27.
Check whether MTD applies to you
Turnover. Making Tax Digital for Income Tax uses qualifying income, which is gross property and self-employment income before any expenses are deducted. Profit is not the test.
Gross. A landlord with £55,000 of rent and £40,000 of expenses has qualifying income of £55,000 and is within MTD from April 2026, despite making only £15,000 of profit.
No. Employment income taxed under PAYE does not count towards qualifying income, no matter how large it is. Only gross property income and gross self-employment turnover count.
Yes. HMRC combines gross property income and gross self-employment turnover into a single qualifying income figure, so £30,000 of rent plus £25,000 of freelance turnover is £55,000.
Last verified 16 September 2026. This is an estimate from a calculator, not tax advice, and GlideOps is not a firm of accountants. It uses 2026/27 rates for England and Northern Ireland and cannot see your full circumstances. Check anything that matters against HMRC guidance or an accountant before you file or commit money.