Is self-employed income considered to be "income" for Revenue purposes

Hi,

I have a question about how Revenue define 'income'. My parents are jointly assessed, one of them is employed and pays PAYE, the other is self-employed. Their combined income for 2015 is 50k. In 2015, the following applied:

At 20% At 40%
Married couple (one income) 42,800 Balance
Married couple (two incomes) 67,600 Balance

The way I see it, their combined income should be taxed at 20% as it is below 67,600. But the Revenue, in the calculation, use 42,800 as a cut-off point and apply 40% to the remaining balance. My question is - do Revenue not consider income earned from being self-employed as "income" for the purposes of the cut-off? Thanks