Making Tax Digital for landlords: the rules for property income

You must use Making Tax Digital for Income Tax if you are registered for Self Assessment, you have property income, self-employment income or both, and your qualifying income is more than the threshold for the tax year. Qualifying income is your gross income before expenses, not your profit.

HMRC tests the threshold using the tax return you sent for an earlier year. Your 2024 to 2025 return decides whether you start in April 2026, your 2025 to 2026 return decides April 2027, and your 2026 to 2027 return decides April 2028.

HMRC checks your return and writes to you if you are over the threshold. If no letter arrives, it is still your responsibility to check. If your qualifying income is £20,000 or less, you are automatically exempt and carry on with a normal Self Assessment return.

Qualifying income adds together your gross rent and any self-employment turnover from the tax return HMRC is testing. Repairs, legal fees and mortgage interest do not reduce it. A landlord with £60,000 of rent and £40,000 of costs still has £60,000 of qualifying income.

If you live in the UK, both UK and foreign property income count. If you are not UK resident, only UK property income and self-employment income declared on your UK return count. Employment income, dividends, pensions and your share of partnership profit do not count.

For a jointly owned property, only your share of the income counts. If you are only told your share after expenses have been taken off, HMRC uses that net figure.

Under MTD, all your UK properties form one UK property business. That includes your share of any jointly let property. You keep one set of digital records for it and send one quarterly update for it, whether you let one flat or ten houses.

Foreign property is treated as one foreign property business. You keep separate records for each foreign property, and they are combined into one foreign property update. Profits and losses from overseas property are kept separate from UK property.

If you are also self-employed, each sole-trade business is separate, with its own records and its own quarterly update. A landlord who also runs one trade sends two updates each quarter.

A digital record is a record of an income or expense, created and stored in software that works with MTD for Income Tax. Each record needs the amount, the date and a category. MTD uses the same categories as Self Assessment, so they match the UK property pages of your return (SA105).

Record transactions close to the date they happen. Each record must exist before the deadline for the update that covers it, or before you send that update if that is earlier. You still keep original documents, such as invoices and bank statements, or copies of them.

Mortgage payments need care. Only the interest is a finance cost, never the capital. You can record just the interest, or record the full payment and adjust it before you finalise the year.

• Rent received
• Premiums for the grant of a lease, reverse premiums and inducements
• Other property income
• Property expenses, such as repairs, legal fees and the cost of services you provide
• Finance costs, such as mortgage interest, kept on their own line

A UK property quarterly update sends a total for each category you used. Income is split into total rent, other income, lease premiums and reverse premiums. Expenses use HMRC’s property expense categories, with separate lines for residential finance costs, non-residential finance costs and residential finance costs brought forward.

If your total UK property turnover is less than £90,000, HMRC allows what it calls simpler categorisation. You can send one total for income and one total for expenses. This also applies if you jointly let a property. Residential landlords must still keep restricted finance costs, such as mortgage interest, separate.

If your turnover reaches £90,000, you must put all the records for that income source into full categories before your next update. That covers records from the start of that tax year and for the following year. If you are not sure whether you will reach £90,000, HMRC says to use full categories from the start. The turnover threshold does not apply to foreign property income.

A quarterly update is a summary of your digital records, not a tax return. Your software adds up the records for your property business and sends the category totals to HMRC. HMRC does not receive individual receipts or invoices, and you do not make accounting or tax adjustments before you send.

Each update covers the tax year to date, from 6 April (or 1 April if you chose calendar update periods) to the end of the update period. If you find a mistake, correct your records and the fix goes into your next update. If no rent came in and you paid nothing during a period, you must still send a nil update.

HMRC’s standard deadlines are 7 August, 7 November, 7 February and 7 May. If your accounting period runs from 1 April to 31 March, you can choose calendar update periods instead, but only before your first update of the year. The deadlines are the same. Your own deadlines come from HMRC and show in your software and your HMRC online account.

If you own a let property with someone else, you only keep digital records for your share of the income and expenses. Your share is part of your one UK property business, not a separate business. Married couples and civil partners who live together are usually taxed in equal shares, and unequal shares need Form 17.

Other joint owners are taxed on their share of ownership unless they agree otherwise. Each owner tests their own qualifying income on their own share. A property let for £50,000 a year and owned equally gives each owner £25,000 of qualifying income from it.

HMRC allows some easements for joint lets. You can record one entry per income category for each update period, and one entry per expense category for the year. You can send income only for joint lets in your quarterly updates, then add the expenses by sending your fourth update again before you submit your tax return. Your records do not need a digital link to the other owner’s records.

After your fourth update, you make any year-end adjustments in your software. Most adjustments change the annual total for a category rather than individual records. They include allowances, removing costs you cannot claim and capital allowances.

The cash basis is the default for property income, and you opt out on your return if you want traditional accounting. The £1,000 property allowance can replace your expenses, but conditions apply. For example, you cannot use it with the tax reduction for residential finance costs. Rent a Room relief, up to £7,500 a year or half that if the income is shared, applies automatically to the Rent a Room income you record.

You submit your tax return through your MTD software by 31 January after the tax year ends. HMRC calls the tax return under MTD the final declaration. MTD does not change how you pay tax or the dates payments are due.

Residential finance costs give a tax reduction at the basic rate, currently 20%, of the lowest of your finance costs (including any brought forward), your property profits or your adjusted total income above the personal allowance. The furnished holiday lettings rules ended from April 2025, so former holiday lets now follow the normal property rules.

Most landlord mistakes under MTD come from carrying old habits into the new rules. These are the ones to watch for.

None of them is hard to fix if you spot it early. A correction made during the year simply goes into your next update.

• Testing the threshold on profit instead of gross rent
• Counting the whole of a jointly owned property instead of your share
• Expecting to send one update for each property, when all UK lets form one business
• Claiming residential mortgage interest as an ordinary expense
• Recording the full mortgage payment and never taking out the capital
• Skipping a nil update because no rent came in that quarter
• Reading the 2026 to 2027 easement as permission to skip updates

SimpleTaxFlow is MTD for Income Tax software for sole traders and landlords. You can keep your spreadsheet and upload your UK property totals for the tax year so far, or keep simple books in Bookkeeping. Bookkeeping is free.

Before you send, you check the figures HMRC will receive. Residential finance costs always stay on their own line. After each update you can see HMRC’s own tax calculation, and at year end you make adjustments and submit your tax return.

• Spreadsheet upload for your own UK property figures, including your share of jointly owned property
• Joint owners can choose Whole property or My share in Bookkeeping
• Simple or Detailed expenses, answered for each business and tax year
• The exact figures sent, and the date and time, saved for you

Tax rules can change and your circumstances matter. Use HMRC’s current guidance to confirm what applies to you.