Making Tax Digital for Landlords — The Complete Guide
Making Tax Digital for income tax applies to landlords as well as sole traders. If your gross rental income — or your combined rental and trading income — exceeds the relevant threshold, you will need to submit quarterly digital updates to HMRC instead of a single annual tax return.
When Does MTD Apply to Landlords?
| From | Gross income threshold |
|---|---|
| 6 April 2026 | £50,000 |
| 6 April 2027 | £30,000 |
| 6 April 2028 | £20,000 |
The threshold is based on gross rental income — not profit. If you have both rental and trading income, the two are combined when assessing whether you are above the threshold.
Rent-a-room income is excluded from the threshold calculation. However, if your rent-a-room income exceeds the allowance and you deduct the allowance as an expense rather than claiming the exemption, the gross income is included.
What Does Quarterly Reporting Look Like for Landlords?
Every quarter you submit your property income and expenses digitally to HMRC using compatible software. The property income categories you must report include total rent, other income from property, and premiums for the grant of a lease.
The expense categories include rent, rates, insurance and ground rents, property repairs and maintenance, residential and non-residential finance costs, legal and management fees, staff costs, travel, and other allowable expenses.
At the end of the tax year you complete a final declaration by 31 January confirming your full income position, including any accounting adjustments.
Easements for Jointly Owned Property
If you own a property jointly, there is an easement available. One co-owner can maintain the main digital records, and the other does not need a digital link to those records. For quarterly submissions you can choose either to report both income and expenses quarterly, or report gross rental income quarterly and submit expense details at the year-end finalisation instead.
Where you are notified of your share of rental income after deduction of expenses, your qualifying income for the MTD threshold is assessed on the net rental income figure.
UK Property vs Foreign Property
MTD covers both UK and foreign property income. Foreign property income requires separate reporting of total rents, other property income, and premiums, along with the same expense categories as UK property. Both must be submitted through compatible software.
What Landlords Are Currently Exempt?
Some groups are exempt or deferred from MTD:
- Non-UK resident companies chargeable to income tax on property income are specifically exempt
- Landlords who are digitally excluded (due to age, disability, location, or religion) can apply for an exemption
- Those claiming Married Couple's Allowance or Blind Person's Allowance are deferred during the current Parliament
- Non-UK residents who would need to file the SA109 residence pages are deferred to April 2027
Frequently Asked Questions
Q: My rental income is £40,000 and I also have self-employment income of £15,000. Do I need to join MTD in April 2026? A: Yes. The threshold is assessed on the combined total of your rental and trading income. £40,000 plus £15,000 equals £55,000, which exceeds the £50,000 threshold for April 2026.
Q: Does MTD change how much tax I pay on rental income? A: No — MTD changes how and when you report income, not what you owe. Tax due and payment deadlines remain the same. The main practical change is moving from one annual return to four quarterly submissions plus a final declaration.
Q: Can my bookkeeper submit the quarterly updates while my accountant handles the year-end? A: Yes. Under MTD there are two types of agent authorisation — a main agent and supporting agents. Your bookkeeper can be authorised as a supporting agent to submit quarterly updates, while your accountant acts as main agent for the year-end final declaration.
Need help preparing for MTD? Contact Liberate Accountants for a free consultation, or learn more about our self assessment service.
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