---
title: "Qualifying income: why MTD counts your takings, not your profit"
description: "Many sole traders think MTD won’t apply because their profit is low. The threshold is based on gross takings and rent. Here’s how to work it out."
url: https://mtdmatch.uk/blog/turnover-vs-profit.html
last_updated: 2026-10-26
language: en-GB
publisher: MTD Match (independent; not affiliated with HMRC)
---

# Qualifying income: why MTD counts your takings, not your profit

The most common mistake about Making Tax Digital: “I only make £20,000, so it doesn’t apply to me.” The threshold looks at what comes in, not what you keep.

## Two numbers, two jobs

|  | Turnover (takings) | Profit |
| --- | --- | --- |
| What it is | Everything customers or tenants paid you | Turnover minus allowable expenses |
| Used for | **Deciding if MTD applies** | Working out how much tax you pay |

## What counts

- Gross self-employment turnover from all your sole-trader businesses
- Gross rent from UK property and overseas property (your share)

## What doesn’t count

- Wages from a job (PAYE)
- Pensions, savings interest, dividends
- Partnership income (for now)

## Three quick examples

| Who | Takings / rent | Profit | MTD? |
| --- | --- | --- | --- |
| Courier with high fuel and van costs | £38,000 | £17,000 | Yes, from April 2027 |
| Builder paid under CIS | £52,000 (gross, before CIS) | £31,000 | Yes, since April 2026 |
| Nurse (employed) letting one flat | £14,400 rent | £6,000 | Not yet – wages don’t count |

Illustrative figures.

## Watch out for “net” payouts

If a platform, letting agent or contractor pays you after taking fees or tax, your turnover is the amount *before* those deductions. Booking-app commission, agent fees and CIS deductions don’t reduce your qualifying income.

## Sources

- [Find out if and when you need to use Making Tax Digital for Income Tax](https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax) – GOV.UK
- [Work out your qualifying income for Making Tax Digital for Income Tax](https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax) – GOV.UK
- [Send quarterly updates using Making Tax Digital for Income Tax](https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates) – GOV.UK
- [Find software that works with Making Tax Digital for Income Tax](https://www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax) – GOV.UK
- [Penalties for Making Tax Digital for Income Tax](https://www.gov.uk/guidance/penalties-for-making-tax-digital-for-income-tax) – GOV.UK

General information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is not affiliated with HMRC.

**Written by the MTD Match team:** We turn HMRC’s Making Tax Digital guidance into plain English for each trade, cite the GOV.UK pages we rely on and update every guide when the rules change.

[How we check our guides](https://mtdmatch.uk/methodology.html) · [About us](https://mtdmatch.uk/about.html)

## Related guides

- [Your year in accountant language](https://mtdmatch.uk/blog/accounting-terms-plain-english.html)
- [What is MTD?](https://mtdmatch.uk/blog/what-is-making-tax-digital.html)
- [The £30,000 wave (April 2027)](https://mtdmatch.uk/blog/mtd-30000-threshold-april-2027.html)
- [Deadlines 2026/27](https://mtdmatch.uk/blog/mtd-deadlines-2026-27.html)
- [Penalties](https://mtdmatch.uk/blog/mtd-penalties.html)
- [Software or accountant?](https://mtdmatch.uk/blog/mtd-software-or-accountant.html)
- [Side income & MTD](https://mtdmatch.uk/blog/side-income-and-mtd.html)
- [What accountants do](https://mtdmatch.uk/blog/what-uk-accountants-do.html)