Making Tax Digital for Landlords — Full Guide

MTD for Income Tax is phased in by qualifying income. As a landlord you are brought into the rules from:

• 6 April 2026 — qualifying income over £50,000
• April 2027 — qualifying income over £30,000
• April 2028 — qualifying income over £20,000

Crucially, the threshold is based on your gross rental income — the rent you receive before deducting mortgage interest, letting fees, repairs or any other cost — combined with any self-employment turnover. Because it is gross, many landlords are surprised to find they are in scope: a portfolio bringing in £55,000 of rent counts as £55,000 of qualifying income even if, after mortgage costs, the taxable profit is only a few thousand pounds. HMRC uses your latest Self Assessment return to decide your start date and will write to you.

Check whether MTD applies to your rental income →

All of your UK property is treated as a single UK property business. You add together the rent and allowable expenses from every UK let — whether that is one flat or a portfolio of houses — and report the totals in your quarterly updates. You do not send a property-by-property breakdown to HMRC in the quarterly figures, but your underlying digital records should still let you see each property clearly.

Foreign property is reported as a separate property business, distinct from your UK lets, because it has its own tax rules. And since the Furnished Holiday Lettings regime was abolished from April 2025, former FHL income is now treated as ordinary property income for MTD — there is no longer a separate FHL category.

If you own property jointly — commonly with a spouse or civil partner — each owner reports their own share of the income and expenses through their own MTD submissions. What matters for the threshold is each individual’s share of the gross income. One owner can be in MTD while the other is not, if only one of them crosses the threshold.

This is where property differs most from a trade. For residential lets, mortgage and other finance costs are not deducted as an ordinary expense. Instead you get a basic-rate (20%) tax reduction based on the finance costs for the year. Your quarterly updates report your rental income and running costs; the finance-cost adjustment is applied at the final declaration, not quarter by quarter.

Your software needs to be set up to record finance costs correctly so they feed into the right calculation at year end rather than being treated as a straightforward deduction.

For most individual landlords the cash basis is the default: you record rent when it is received and expenses when they are paid. This suits the way rent and bills usually flow. You can elect to use accruals accounting instead if your circumstances call for it. Either way, your software must be configured to match.

From the start of your first MTD year you must keep digital records of:

• all rental income received, by date and amount;
• allowable expenses — repairs and maintenance, letting agent fees, insurance, ground rent and service charges, safety certificates and so on;
• finance costs such as mortgage interest, recorded so the tax reducer can be applied;
• any adjustments, including private-use and capital items.

Records must be captured at the point of transaction and carry a digital linkthrough to the figures you submit — no retyping totals by hand.

Rather than a single annual return you send a short quarterly update of your property income and expenses. Using the standard quarters:

• 6 April – 5 July — due 7 August
• 6 July – 5 October — due 7 November
• 6 October – 5 January — due 7 February
• 6 January – 5 April — due 7 May

The updates are cumulative and are estimates only — no tax is due and no reliefs are claimed at this stage. You can elect to use calendar quarters(ending 30 June, 30 September, 31 December and 31 March) if that fits your records better.

After the fourth quarter you complete a final declaration, which replaces the Self Assessment return. This is where the year’s property accounts are finalised — applying the finance-cost tax reduction, capital allowances on qualifying items, any private-use adjustments — and where your other income and reliefs are brought in to settle your overall tax bill. It is due by 31 January following the tax year, with tax payable then as now.

MTD uses a points-based system for late quarterly updates: each miss earns a point, and reaching the threshold triggers a £200 penalty. Late payment of tax is charged separately with interest. The way to avoid all of this is simply to keep records current and let your software submit on time.

To prepare: confirm your start date from your gross rental income, choose HMRC-recognised software that handles finance costs and multiple properties, start keeping digital records from day one of your first MTD year, sign up for MTD and connect your software — or hand the quarterly work to an adviser.

See how we set up landlord MTD software →