Is the £30,000 Making Tax Digital threshold gross or net? Worked examples

By Patrick Roper ACA, ICAEW chartered accountant. Last reviewed 6 November 2026. Figures next checked by 1 December 2026.

Gross. The threshold is tested on your total rent and self-employed turnover before any expenses, mortgage interest or allowances are taken off, as shown on your tax return. Employment income, pensions, dividends and partnership profit shares do not count at all. A landlord with £34,000 of rent and £10,000 of costs is over the £30,000 line and joins on 6 April 2027, because HMRC looks at the £34,000.

What HMRC counts

HMRC calls the figure "qualifying income": your total income from self-employment and property, before expenses, based on the tax return you submitted. Its own example adds £25,000 of rent to £27,000 of self-employed turnover and gets £52,000. Nothing is deducted.

HMRC lists what does not count:

• Employment income under PAYE.
• Your share of profit from a partnership as an individual partner.
• Dividends, including from your own company.
• State and private pensions.
• Income from UK REITs or property authorised investment funds.

Property held in a limited company is outside these rules altogether; the company pays corporation tax and MTD for Income Tax does not apply to it.

Three worked examples

CIS subcontractor with rental income: which test, and which fee?

One test, on two figures added together: your gross self-employed income plus your share of gross rent. For a subcontractor, gross is what you were paid before the contractor's CIS deduction and before your expenses. GOV.UK's CIS guidance says the return records "your total pay before deductions were taken" as income, and that is the figure HMRC reads.

An example for 2025/26. A bricklayer is paid £24,000 before deductions. The contractor deducts 20%, which is £4,800, and pays him £19,200. He also owns a flat with his partner that brings in £14,000 of rent, split equally. His qualifying income is £24,000 plus £7,000, which is £31,000. He is over £30,000 and starts on 6 April 2027. On the £19,200 that reached his bank, or on the trade alone, he would have looked under the line.

Two businesses then mean two sets of quarterly updates. HMRC's guidance says updates are sent "for each self-employment and property business you have", so the trade has its four updates and the property business has its four, on the same deadlines. There is still one tax return at the year end, covering both. HMRC's penalties page says you can only get one penalty point per deadline, even with more than one business.

The fee follows the number of income sources. Our £699 a year covers rent plus a self-employed trade: both sets of quarterly updates and the year-end return. Our £399 a year covers rental income only, for up to three properties in your own name. Nothing is paid until you approve your first quarterly update.

Check your own number

Put in your gross rent plus any self-employed turnover for 2025/26, say whether any of it is jointly owned, and the checker gives the start date HMRC's rules point to. It uses the thresholds above and nothing else.

Why people get this wrong

A survey of 276 landlords reported by Property118 on 13 October 2026 found that only 28% of those with £30,000 to £49,999 of income named April 2027 as their start date, and some thought they had already joined. The two usual mistakes are netting off mortgage interest before comparing to the threshold, and adding in a salary. Interest comes off at the year end as a tax credit, not before the threshold test; salary never enters it.

If your figure is at or under £30,000, nothing is owed in 2027 and nobody should be selling you quarterly filing for it.