Understanding the MTD £50k threshold: do the new rules apply to you?

From 6 April 2026, HM Revenue & Customs (HMRC) changed how self-employed individuals and landlords report their taxes. If your total “qualifying income” was more than £50,000 in the 2024–25 tax year, you generally need to keep digital records and submit quarterly updates using compatible software from that date, unless an exemption applies. Avona is built specifically to help handle this.

But what exactly counts towards that £50,000 figure? It is a common area of confusion, but the rules are straightforward once you break them down.

What counts as “qualifying income”?

Your qualifying income is the combined total of your gross income from two specific sources:

• Self-employment income: This includes income you receive from working for yourself, including freelance, consultancy, or sole-trader earnings.
• Property rental income: This includes rental income from UK and, for UK tax residents, foreign residential or commercial properties. Special rules can apply if you are not UK tax resident.

The “combined” rule.

If you have multiple streams of business or property income, you must add them together. For example, if you earned £35,000 from a self-employed trade and also received £20,000 from rental income in 2024–25, your total qualifying income was £55,000. Because this combined total pushes you over the £50,000 threshold, you generally need to comply with MTD rules from April 2026.

Do I deduct my business expenses first?

No. This is the most important rule to remember: qualifying income is based on your gross income, not your profit.

You calculate your qualifying income before deducting allowable business expenses, tax reliefs, or personal allowances. For example, if you earned £52,000 from freelancing in 2024–25 but spent £12,000 on business expenses, your qualifying income remains £52,000, and you generally need to use MTD software from April 2026.

What does not count towards the threshold?

HMRC looks at your self-employment and property income. You do not include the following when calculating your MTD qualifying income:

• Income from an employer taxed under PAYE.
• Savings interest and pension income.
• Dividends, including those from your own company.
• Capital gains from the sale of properties.

As an example, if you earned £28,000 from your job under PAYE and £35,000 from self-employment in 2024–25, your qualifying income for MTD was just £35,000. Because you were under £50,000, you were not mandated for the initial April 2026 rollout on that basis.

Being below the initial threshold does not necessarily mean MTD will never apply to you. Check HMRC’s guidance on when you need to start for later phases and exemptions.

What happens if I co-own a property?

If you own a rental property jointly with someone else, only your share of the property income counts towards your qualifying income. HMRC has a special rule where you only receive notice of your share after expenses have been deducted: it assesses that reported figure.

Your next steps.

If your gross combined income from self-employment and property exceeded £50,000 in 2024–25, check your obligations now: the April 2026 start date has already passed.

1. Check your tax return: Review your 2024–25 qualifying income and whether an exemption applies.
2. Use compatible software: Spreadsheets alone cannot submit your MTD updates, but you can keep using them with compatible bridging software and the required digital links.
3. Get connected: A bank-connected tool like Avona can help you track income and organise records. Review your transactions and include any business income that is not captured by your connected accounts.

Still unsure if you cross the threshold? Our support team is here to help. Submit a support ticket and we’ll help you figure out your next steps.

Further reading.

• HMRC: Work out your qualifying income
• HMRC: Using Making Tax Digital, including spreadsheets and bridging software