You must meet the Making Tax Digital for Income Tax requirements if all of the following apply:
Check if you can sign up
You cannot sign up if you are a:
- trustee, including a charitable trustee or a trustee of non-registered pension schemes
- personal representative of someone who has died
- Lloyd’s member, in relation to your underwriting business
- non-resident company
If your qualifying income is £10,000 or less, you do not need to sign up, but you can still choose to voluntarily sign up.
If you can show that it’s not reasonable or practical for you to use computers or the internet, you can apply for an exemption.
You must continue to report your income and gains in your Self Assessment tax return if you either:
- cannot sign up to Making Tax Digital for Income Tax
- choose not to voluntarily report income through Making Tax Digital for Income Tax
Check what is included in your qualifying income
Your qualifying income is the combined income that you get in a tax year from self-employment and property income sources. We assess this before you deduct expenses (that is, your gross income or turnover).
All of your qualifying income must be reported through Making Tax Digital compatible software.
All other sources of income reported through Self Assessment, such as income from employment, dividends or savings, do not count towards your qualifying income. You will need to report income from these sources using either your:
- Making Tax Digital compatible software (if it has the functionality)
- HMRC online services account
If your accounting period is longer or shorter than 12 months, and we have the necessary data, we will annualise your qualifying income. For example, if you have become self-employed, but you have only been trading for 6 months in your first tax year, then we will double your income to find your qualifying income.
If you get income from more than one source
Income from all relevant sources of income will count towards your qualifying income. For example, your gross income (income before you deduct expenses) could be:
- £5,000 from rental income
- £7,000 from self-employment income
In this example, your total qualifying income would be £12,000.
If you get income from a jointly owned property
Your share of the property income will count towards your qualifying income. For example, you could:
- jointly own a property with your sibling which generates £30,000 in income
- both receive an equal share
- not have any income from self-employment
In this example, your qualifying income would be £15,000.
If you receive disguised investment management fees or income based carried interest
These forms of income are treated as the profits of a deemed trade and will form part of your qualifying income.
If you get income from a partnership
Income from a partnership does not count towards your qualifying income, unless you receive disguised investment management fees or income based carried interest.
If you are a beneficiary of a bare trust
Any property or trading income that you are entitled to will count towards your qualifying income.
If you are a beneficiary of an interest in possession trust
Any property and trading income that is paid directly to you and bypasses the trustees will count towards your qualifying income.
How residence and domicile affect your qualifying income
You can find out more about residence, domicile and the remittance basis and deemed domicile rules.
If you are resident and domiciled in the UK
Your income from foreign property or foreign self-employment will count towards your qualifying income.
For example, you could:
- be self-employed and resident in the UK
- rent out a property in another country
Both income sources will contribute to your qualifying income.
If you are deemed domiciled in the UK
Income from foreign property or foreign self-employment will count towards your qualifying income, if you are treated as UK domiciled for that tax year.
If you are remitting foreign income from a year in which the remittance basis applied to you, that income will not contribute to your qualifying income.
If you are domiciled outside of the UK
Only income from UK self-employment and UK property will count towards your qualifying income. You do not need to meet the requirements in relation to your foreign income.
For example, you could:
- be domiciled in France
- rent out a property in France
- run a business in the UK
Only your UK self-employment income would contribute to your qualifying income.
We will ask you to confirm your domicile status when you sign up for Making Tax Digital for Income Tax.
Check when to sign up
If you can sign up for Making Tax Digital for Income Tax, you should check when to sign up.
You must meet the Making Tax Digital for Income Tax requirements if all of the following apply:
Check if you can sign up
You cannot sign up if you are a:
- trustee, including a charitable trustee or a trustee of non-registered pension schemes
- personal representative of someone who has died
- Lloyd’s member, in relation to your underwriting business
- non-resident company
If your qualifying income is £10,000 or less, you do not need to sign up, but you can still choose to voluntarily sign up.
If you can show that it’s not reasonable or practical for you to use computers or the internet, you can apply for an exemption.
You must continue to report your income and gains in your Self Assessment tax return if you either:
- cannot sign up to Making Tax Digital for Income Tax
- choose not to voluntarily report income through Making Tax Digital for Income Tax
Check what is included in your qualifying income
Your qualifying income is the combined income that you get in a tax year from self-employment and property income sources. We assess this before you deduct expenses (that is, your gross income or turnover).
All of your qualifying income must be reported through Making Tax Digital compatible software.
All other sources of income reported through Self Assessment, such as income from employment, dividends or savings, do not count towards your qualifying income. You will need to report income from these sources using either your:
- Making Tax Digital compatible software (if it has the functionality)
- HMRC online services account
If your accounting period is longer or shorter than 12 months, and we have the necessary data, we will annualise your qualifying income. For example, if you have become self-employed, but you have only been trading for 6 months in your first tax year, then we will double your income to find your qualifying income.
If you get income from more than one source
Income from all relevant sources of income will count towards your qualifying income. For example, your gross income (income before you deduct expenses) could be:
- £5,000 from rental income
- £7,000 from self-employment income
In this example, your total qualifying income would be £12,000.
If you get income from a jointly owned property
Your share of the property income will count towards your qualifying income. For example, you could:
- jointly own a property with your sibling which generates £30,000 in income
- both receive an equal share
- not have any income from self-employment
In this example, your qualifying income would be £15,000.
If you receive disguised investment management fees or income based carried interest
These forms of income are treated as the profits of a deemed trade and will form part of your qualifying income.
If you get income from a partnership
Income from a partnership does not count towards your qualifying income, unless you receive disguised investment management fees or income based carried interest.
If you are a beneficiary of a bare trust
Any property or trading income that you are entitled to will count towards your qualifying income.
If you are a beneficiary of an interest in possession trust
Any property and trading income that is paid directly to you and bypasses the trustees will count towards your qualifying income.
How residence and domicile affect your qualifying income
You can find out more about residence, domicile and the remittance basis and deemed domicile rules.
If you are resident and domiciled in the UK
Your income from foreign property or foreign self-employment will count towards your qualifying income.
For example, you could:
- be self-employed and resident in the UK
- rent out a property in another country
Both income sources will contribute to your qualifying income.
If you are deemed domiciled in the UK
Income from foreign property or foreign self-employment will count towards your qualifying income, if you are treated as UK domiciled for that tax year.
If you are remitting foreign income from a year in which the remittance basis applied to you, that income will not contribute to your qualifying income.
If you are domiciled outside of the UK
Only income from UK self-employment and UK property will count towards your qualifying income. You do not need to meet the requirements in relation to your foreign income.
For example, you could:
- be domiciled in France
- rent out a property in France
- run a business in the UK
Only your UK self-employment income would contribute to your qualifying income.
We will ask you to confirm your domicile status when you sign up for Making Tax Digital for Income Tax.
Check when to sign up
If you can sign up for Making Tax Digital for Income Tax, you should check when to sign up.
