Making Tax Digital for Landlords: Everything You Need to Know
Last updated: February 2026
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) applies to landlords just as much as it applies to sole traders. If your qualifying income exceeds the relevant threshold, you must keep digital records — digital record keeping is a core requirement and file quarterly updates with HMRC through compatible software. This guide explains exactly how MTD works for UK landlords, what counts as qualifying income, and the practical steps you need to take before April 2026.
Many landlords have never used accounting software. Some still track rent in spreadsheets or paper notebooks. MTD changes that. The good news is that the transition is manageable with the right preparation, and landlord-specific software options exist to make the process straightforward.
Which rental income counts as qualifying income
Under MTD ITSA, qualifying income means your gross income from UK self-employment plus your gross income from UK property. For landlords, the property element is your total rental receipts before any deductions for expenses such as mortgage interest, repairs, insurance or letting agent fees. It is the top-line figure, not your taxable profit.
All types of UK rental income count towards this total. That includes buy-to-let properties, HMOs (houses in multiple occupation), furnished lettings, unfurnished lettings, holiday lets and any other UK property income reported on the property pages of your Self Assessment return. Whether you let a single flat or a portfolio of ten houses, the treatment is the same: all your UK property income is aggregated as a single income source for MTD purposes.
Overseas property income does not count towards qualifying income for MTD ITSA. Only UK property is included.
The income thresholds and phase dates
MTD ITSA is being rolled out in three phases based on qualifying income:
| Phase | Start date | Qualifying income threshold |
|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 |
| Phase 2 | 6 April 2027 | Over £30,000 |
| Phase 3 | 6 April 2028 | £20,000 or more |
A common misunderstanding among landlords is that only property income counts. That is wrong. Your qualifying income is the combined gross figure across both self-employment and UK property. A landlord earning £35,000 in rent and £20,000 from freelance work has qualifying income of £55,000. That brings them into Phase 1, even though neither source alone exceeds £50,000. Our full MTD Income Tax guide explains how HMRC calculates qualifying income in more detail.
Multiple properties: one income source
If you own several rental properties, you do not need to submit separate quarterly updates for each one. HMRC treats all UK property income as a single income source under MTD. You report the combined totals for income and expenses across your entire property portfolio in each quarterly update.
This simplifies things considerably for portfolio landlords. You can aggregate your rental receipts and allowable expenses across all properties, then submit one quarterly update covering the lot. Your MTD-compatible software (you must use software that complies with MTD) should allow you to track each property individually for your own records while producing a single consolidated submission for HMRC.
Letting agents and net figures
Many landlords receive monthly statements from letting agents showing the net amount after the agent has deducted their management fee and any repair costs. Under MTD, you can use these net figures in your quarterly updates during the year, provided you make an adjustment in your Final Declaration to report the correct gross income and full expenses.
This is a practical concession from HMRC. It means you do not need to unpick every agent statement to separate gross rent from deductions during each quarter. You record what the agent pays you, then reconcile the full figures at year end. Your accountant or software should handle this adjustment as part of the Final Declaration process.
Rent a Room relief and MTD
The Rent a Room scheme lets you earn up to £7,500 per year tax-free from letting furnished accommodation in your own home. If your gross receipts from lodgers fall below this threshold, you do not pay tax on that income, and it does not count towards your qualifying income for MTD.
However, if your Rent a Room income exceeds £7,500 and you choose not to use the relief (or cannot because you exceed the limit), the full amount counts as UK property income. In that scenario, it forms part of your qualifying income total. Landlords who let rooms in their own home alongside separate buy-to-let properties should check their combined figures carefully against the GOV.UK guidance on Rent a Room.
Quarterly deadlines for landlords
Once you are within MTD ITSA, you submit four quarterly updates per year covering your property income and expenses. The standard deadlines are:
| Quarter | Period covered | Submission deadline |
|---|---|---|
| Q1 | 6 April to 5 July | 7 August |
| Q2 | 6 July to 5 October | 7 November |
| Q3 | 6 October to 5 January | 7 February |
| Q4 | 6 January to 5 April | 7 May |
After the fourth quarterly update, you submit a Final Declaration by 31 January following the end of the tax year. This replaces the traditional Self Assessment tax return and is where you confirm total income, claim allowances and reliefs, and finalise your tax liability.
For the 2026/27 tax year, HMRC is applying a soft-landing period. No penalty points will be issued for late quarterly updates during the first year. From 2027/28, the full points-based penalty system applies: each late update adds one point, and four points trigger a £200 fixed penalty.
Software options for landlords
If you have never used accounting software before, the prospect of choosing and learning a new tool can feel daunting. The reality is that landlord-focused software tends to be simpler than general business accounting packages, because the transaction types are more predictable: rent in, expenses out.
Several options are designed specifically for property landlords:
- Hammock – built from the ground up for UK residential landlords. It handles rent tracking, expense categorisation and MTD submissions, with a clean interface aimed at non-accountants.
- Landlord Studio – a popular property management app that includes income and expense tracking alongside tenant management features. It supports MTD ITSA filing.
- RentalBux – a newer entrant focused on simplicity for landlords with smaller portfolios. It covers the core MTD requirements without unnecessary complexity.
- Xero – a full accounting platform used by many accountants. It supports property income tracking through separate categories and is well suited to landlords who also have self-employment income. Jack Ross is a Xero Gold Partner and can set up property tracking for you.
HMRC maintains a full list of recognised MTD-compatible software on GOV.UK. Whichever tool you choose, make sure it supports MTD ITSA for property income before committing. Browse our software comparison page for a broader overview.
Practical steps to prepare
If you currently track rental income on paper or in a basic spreadsheet, start preparing now. Do not wait until April 2026. The following steps will help you transition smoothly:
- Check your qualifying income. Look at your most recent Self Assessment return. Add your gross property income to any self-employment income. If the total exceeds £50,000, you are in Phase 1.
- Choose your software. Pick a tool that suits the size of your portfolio and your level of comfort with technology. If your accountant already uses a particular platform, align with them.
- Set up your properties. Enter each property into your chosen software with its address, tenant details and rental amounts. This groundwork saves time later.
- Digitise your records. If you have receipts in a drawer, photograph them and upload them to your software. Most tools accept receipt images and can extract the key details.
- Connect to HMRC. Your software will guide you through linking your HMRC account via the MTD API. You will need your Government Gateway credentials to authorise the connection.
- Run a test quarter. Use the period before April 2026 to enter some real transactions and familiarise yourself with the submission process. Several software providers offer sandbox environments for practice.
Joint property ownership
If you own property jointly with a spouse, partner or another person, each co-owner reports their share of the income separately under MTD. The split typically follows the ownership share, though married couples and civil partners can vary the split by making a formal declaration to HMRC. Joint property ownership has specific rules around how income is allocated and reported. We will cover this topic in detail in a dedicated article on joint property and MTD.
Worked example: Priya, landlord and freelancer
Priya owns two buy-to-let flats in Leeds. Flat A generates £1,400 per month in rent (£16,800 annually) and Flat B generates £2,100 per month (£25,200 annually). Her total gross property income is £42,000 per year. She also earns £15,000 per year from freelance translation work.
Priya’s qualifying income is £42,000 plus £15,000, giving a combined total of £57,000. This exceeds the Phase 1 threshold of £50,000, so she must register for MTD ITSA from 6 April 2026. Note that her property income alone (£42,000) would not have reached the Phase 1 threshold, but when combined with her freelance earnings, she is brought into scope.
Priya chooses Landlord Studio for her property income because she finds it simpler than a full accounting package. For her freelance income, she already uses a spreadsheet with a bridging tool. She registers for MTD through HMRC’s sign-up service, confirming both income sources.
For Q1 (6 April to 5 July 2026), Priya records three months of rent from both flats: £4,200 from Flat A and £6,300 from Flat B, totalling £10,500 in property income. She also records £3,750 in freelance income for the same period. Her allowable property expenses for the quarter include £480 in letting agent fees, £320 in insurance and £150 in minor repairs. She submits her Q1 update for both income sources by the 7 August 2026 deadline.
At the end of the tax year, Priya submits her Final Declaration by 31 January 2028. This is where she confirms her total annual figures, claims her finance cost restriction for mortgage interest, and finalises her tax position for 2026/27.
Frequently asked questions
Do furnished holiday lets count differently under MTD?
Furnished holiday lets (FHLs) are treated as UK property income for MTD purposes and count towards your qualifying income. However, the special tax treatment that FHLs previously received (such as capital allowances and loss relief advantages) was abolished from April 2025. For MTD, FHL income is simply part of your overall UK property income.
What if my rental income fluctuates year to year?
HMRC assesses your qualifying income based on your most recent Self Assessment return. If your income drops below the threshold in a subsequent year, you may be able to leave MTD, though the rules on exiting are not yet fully confirmed. If your income rises above a lower phase threshold, you will be brought into scope at the relevant date.
I only have one property. Do I still need MTD?
Yes, if your qualifying income (combined gross property and self-employment income) exceeds the threshold. The number of properties is irrelevant. A single property generating enough rent can trigger the obligation on its own, or a modest rental income can combine with self-employment earnings to push you over the line.
Can my letting agent submit quarterly updates for me?
Letting agents cannot submit MTD returns on your behalf unless they are also acting as your tax agent. The quarterly submissions must go through MTD-compatible software linked to your HMRC account. Your accountant can handle submissions as your authorised agent, but a letting agent managing your property does not automatically have this authority.
Need help getting ready for MTD?
Jack Ross, a Manchester-based chartered accountancy firm established in 1948, helps landlords prepare for Making Tax Digital. From choosing the right software to handling your quarterly submissions and Final Declaration, we take the compliance burden off your hands. Contact Jack Ross
