MTD for Income Tax: a guide for landlords

Landlords are one of the main groups affected by Making Tax Digital (MTD) for Income Tax. Because the test is based on gross rents, many landlords with modest profits are brought in, and those with several properties often cross the £50,000 threshold first. This guide covers the points that are specific to letting.

When landlords must join

The figure is gross income: total rents received (and other property income such as service charges you keep) before deducting letting agent fees, repairs, insurance or mortgage interest. UK and overseas property income both count. Employment income, pensions and dividends do not.

Jointly owned property

If you own a property jointly, only your share of the rent counts towards your qualifying income. A married couple sharing £60,000 of rent equally each have £30,000 of property income, so each would join from April 2027 if that level continues, not April 2026. Each joint owner reports their own share in their own MTD account.

Example

Daniel owns three flats with gross rents of £42,000 and a 50% share of a house with his sister, which brings in £16,000 a year (£8,000 each). His qualifying income is £50,000 exactly in 2024/25, which is not over £50,000, so he did not need to join in April 2026. If his 2025/26 gross rents are over £30,000, he joins from April 2027.

Records and quarterly updates

You need to keep digital records of each item of property income and expense, and send cumulative quarterly updates by 7 August, 7 November, 7 February and 7 May. Updates use the same categories as the property pages of the tax return, such as rents, repairs and maintenance, insurance, letting agent fees, and legal and professional costs.

Joint lets: income only during the year

For jointly let properties, HMRC allows you to send property income only in your quarterly updates if you prefer, and report the expenses at the year end by resending the fourth update before filing your return. This helps where a co-owner or agent controls the expense records. For properties you own alone you must include both income and expenses.

Using your letting agent’s statements

Many landlords rely on monthly agent statements. You can record the gross rent and each fee or cost deducted by the agent as separate digital records, or use software that imports agent data. Recording only the net amount paid to you is not enough, because HMRC needs gross income and expenses by category.

Year-end adjustments

Some property tax rules are applied only when you file the tax return, not in the quarterly updates:

• finance costs: mortgage interest is not deducted as an expense but gives a basic rate tax credit; see Section 24 mortgage interest relief
• replacement of domestic items relief for furniture and appliances in furnished lets
• capital allowances where they still apply, for example on equipment in common parts
• the property allowance of £1,000, if you choose it instead of actual expenses
• adjustments between cash basis and accruals basis

From April 2027, property income is taxed at its own rates of 22%, 42% and 47%, which your software will need to apply in the tax return.

Furnished holiday lets

The furnished holiday lettings regime ended on 5 April 2025, so holiday lets are now treated like other residential lettings for Income Tax. Their gross income counts towards your MTD qualifying income in the usual way. See furnished holiday let tax rules.

Penalties and deadlines

The same rules apply as for sole traders: no penalty points for late quarterly updates in 2026/27, points from 2027/28, a £200 penalty at four points, and late payment penalties on tax paid late. The tax return and any balancing payment are due by 31 January.

Getting ready

1. Work out your gross property income for the qualifying year, using your share of joint property.
2. Decide whether to keep accounts per property or per portfolio; software must report all UK property together, with overseas property separately.
3. Choose software that handles property income and joint ownership; see MTD software requirements.
4. Agree with your letting agent how you will get data each quarter.
5. Sign up before your first MTD year starts, or ask your accountant to do it.

Frequently asked questions

Do landlords have to use Making Tax Digital?

Yes, if gross rents plus any self-employed turnover exceed the threshold: £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028.

Is the MTD threshold for landlords based on rent or profit?

On gross rent received, before expenses and mortgage interest.

How does MTD work for jointly owned property?

Each owner counts only their share of the rent towards the threshold and reports their own share. For joint lets, quarterly updates can include income only, with expenses added at the year end.

Does my letting agent submit my quarterly updates?

Only if they act as your tax agent through HMRC’s agent services. Otherwise you, or your accountant, submit them, using information from the agent’s statements.