MTD for Landlords: How Rental Income Is Affected

MTD for landlords means that individuals with enough rental income must keep digital records and send HMRC quarterly updates instead of relying on one annual tax return. The test uses gross rent plus any self-employment income: over £50,000 from April 2026, over £30,000 from April 2027 and over £20,000 from April 2028.

Many landlords assume Making Tax Digital is only for businesses. It is not. If you let property in your own name, you are treated much like a sole trader for MTD purposes, and the next cohort includes many landlords with one or two properties. This guide explains how the rules apply to rental income and what to do now.

Key takeaways

• Individual landlords are in scope; property held in a limited company is not.
• The threshold uses gross rent, before expenses, added to any self-employment turnover.
• From 6 April 2027 the threshold is £30,000, based on the 2025/26 tax year.
• You keep digital records per property business and send quarterly updates.
• Agent statements help, but the records still need to be in compatible software.

What MTD for Income Tax means for a landlord

Making Tax Digital for Income Tax changes how you report, not how much tax you pay. Once you are in, you record rental income and expenses digitally, send a summary to HMRC every quarter using compatible software, and finish the year with a final declaration. You can check whether you are affected on GOV.UK's MTD for Income Tax eligibility page.

UK property and overseas property are treated as separate property businesses, so a landlord with both would keep separate records and send updates for each. If you are also self-employed, that business is added too.

Before and after MTD: a landlord's year compared

Working out your qualifying income

Add together your gross rental income for the tax year and any gross self-employment income. Do not deduct expenses, mortgage interest or agent fees. Employment income, pensions, savings and dividends are ignored. If you own property jointly, you generally look at your own share. Because the 2025/26 year decides whether you join in April 2027, your 2025/26 tax return — due by 31 January 2027 — is the key document. Our April 2027 preparation plan walks through the months ahead.

Step by step: getting a rental portfolio MTD-ready

1. Total your 2025/26 gross rent and any self-employment turnover to see which side of £30,000 you fall.
2. Separate property money into a dedicated bank account if you have not already.
3. Choose software from HMRC's list of compatible products that handles property income, and multiple properties if you have them.
4. Set up a routine for agent statements so each month's rent, fees and repairs are entered promptly.
5. Record direct costs such as insurance, ground rent and repairs you pay yourself.
6. Keep evidence for finance costs, which are treated differently from other expenses for individual landlords.
7. Sign up and diarise the quarterly deadlines; see our guide to quarterly update deadlines.

Expenses and finance costs under MTD

MTD does not change which expenses you can claim. Letting agent fees, repairs, insurance, ground rent, service charges and similar running costs are recorded as they arise. What changes is that they need to be in your digital records each quarter, rather than totted up once a year.

Mortgage interest and other finance costs on residential property continue to be treated differently for individual landlords: rather than being deducted as an expense, they generally give a tax credit at the basic rate. Your software should let you record them separately so that the final declaration treats them correctly. Capital spending, such as a new extension, is also treated differently from repairs. Quarterly updates are only a summary of income and expenses; the detailed adjustments are finalised at year end, which is where an accountant can help make sure nothing is missed or double counted.

Worked example (illustrative example)

"Marcus", an invented illustrative example, works full time in a salaried job and owns two flats in his own name. In 2025/26 the flats brought in £19,200 and £13,800 of rent, a total of £33,000. After agent fees, repairs and other costs his rental profit is much lower, and his salary is ignored for MTD.

Because his gross rent of £33,000 is over £30,000, Marcus must use MTD for Income Tax from 6 April 2027. He opens a separate account for the flats, chooses software that handles two properties, and starts entering his agent's monthly statements from January 2027 so that the habit is formed before it is compulsory. Had he owned the flats jointly with his partner in equal shares, each would have had £16,500 of rent, below the 2027 threshold. The person and figures are invented; your own position depends on your ownership and income.

Common mistakes

• Testing profit rather than gross rent.
• Forgetting self-employment income, which is added to rent.
• Relying on the agent to handle MTD without checking what they actually provide.
• Mixing personal and rental money in one account.
• Assuming company-owned property counts — it does not for MTD for Income Tax.

Let us handle MTD for your lettings

Our MTD compliance service starts from £49 per month and covers software set-up, quarterly updates and your final declaration. For landlords who want records kept for them, our bookkeeping service starts from £150 per month. Our guide to MTD digital records explains what the software needs to hold.

Not sure whether your rent puts you in scope? Get in touch or compare our pricing.