MTD for Landlords: What Rental Income Means Under the New Rules

This isn't just about the self-employed

There's a widespread assumption that Making Tax Digital is aimed at freelancers and sole traders. It isn't. If you earn income from renting out property, you're in scope too. Same rules, same deadlines, same quarterly reporting.

Whether it's a buy-to-let flat, a house you inherited, or a portfolio of six properties, MTD applies if your income is above the threshold.

Income thresholds

Same phased rollout as everyone else:

Two things to watch here.

First, it's gross rental income. What your tenants pay you before you deduct mortgage interest, repairs, agent fees, or anything else. If you collect £55,000 in rent but your costs bring the profit down to £15,000, your qualifying income is still £55,000.

Second, if you're also self-employed, both income streams count. A landlord collecting £30,000 in rent who also does freelance work billing £25,000 has qualifying income of £55,000. First wave.

Employment income (a regular salary) does NOT count towards the threshold. Only self-employment and property income.

What records do landlords need to keep?

For every transaction related to your rental property, you record the date, amount, and category. Digitally.

Income is the easy part. Rent received, any other payments from tenants.

Expenses are where it gets more detailed. Typical categories for landlords:

• Mortgage interest (you can claim tax relief at the basic rate)
• Repairs and maintenance (new boiler, fixing a leak, repainting)
• Insurance (landlord, buildings, contents)
• Letting agent fees
• Legal and professional costs (tenant referencing, solicitor fees)
• Ground rent and service charges on leasehold properties
• Council tax and utilities (if you pay them rather than the tenant)
• Travel to inspect or maintain properties

These are the same expense types you'd put on a Self Assessment return. The difference is you record and report them quarterly instead of annually.

Multiple properties

If you own several rental properties, you don't submit separate quarterly updates for each one. Your update to HMRC covers total property income and total expenses across all properties combined.

That said, it's worth keeping your records broken down by property. Makes it much easier to spot which properties are actually making money and which are draining it. Most software lets you tag transactions by property for exactly this reason.

Joint ownership

If you own a property with someone else, say your spouse, each of you reports your share separately.

Own it 50/50? Each person reports half the income and half the expenses. Each person needs their own MTD software setup and files their own quarterly updates. You can't submit a joint return.

This means if a couple owns a rental property together with combined income of £60,000, each person's qualifying income from property is £30,000. At £30k each, neither hits the £50,000 threshold for the 2026 start date, but both would be in scope from April 2027 when the £30,000 threshold kicks in.

Worth thinking about if you're close to a threshold boundary.

Furnished holiday lets

The special tax treatment for furnished holiday lettings ended in April 2025. FHL properties are now taxed the same as any other rental. Under MTD, your holiday let income goes in the same pot as your regular rental income for quarterly reporting.

If you were relying on any of the old FHL-specific reliefs (capital allowances, pension contribution rules), those are gone. Chat to an accountant if you're unsure how this affects your position.

A timing thing that catches landlords out

Your tax quarter runs from the 6th of one month to the 5th of the next relevant month. Q1 is 6 April to 5 July.

But rent is usually paid on the 1st of each month. So your April rent covers 1 to 30 April, but only the portion from 6 April onwards falls in Q1.

In practice, most people use the cash basis for property income, which means you record income when you actually receive it and expenses when you actually pay them. If rent lands in your bank account on 1 April, you record it on 1 April. Whether that falls in the old tax year or the new one depends on the date.

If you use the accruals basis instead, income is recorded when it's due rather than when it hits your account. That's more common for larger property portfolios.

Either way, your software handles the quarter boundaries. You just need to know which basis you're on.

Practical steps for landlords

1. Add up your rental income. Gross figures across all properties. If you're also self-employed, add that too. That's your qualifying income.

2. Get your records out of paper. If you're tracking rent and costs in a notebook or a folder of bank statements, it's time to go digital. Even a spreadsheet works. Purpose-built software is easier.

3. Choose MTD software. Look for something that handles property income well. You want to be able to categorise expenses properly and track by property if you've got more than one.

4. Set up your categories. Mortgage interest, repairs, insurance, agent fees, and so on. Get them right from the start and recording transactions becomes quick.

5. Calendar the deadlines. 7 August, 7 November, 7 February, 7 May. Your first quarterly update is Q1, due 7 August 2026. Set reminders. Don't miss them. Full dates in our MTD deadlines guide.

6. If you jointly own property, make sure both owners are set up separately. Two lots of software, two sets of submissions. Read our guide to jointly owned property under MTD for the full details.

There is an upside

Quarterly reporting means you'll have a much clearer picture of how your properties are performing throughout the year. No more getting to January and realising that a property you thought was profitable actually cost you money once you factor in that emergency plumbing job from September.

More admin? Yes. But also more visibility. If you've got multiple properties, that matters when you're deciding whether to keep, sell, or invest in a property.