MTD software for sole traders who are also landlords

Qualifying income is the total of your self-employment and property income before expenses, taken from an earlier tax return. When you have both, you add them together. Neither source has to be over the threshold on its own.

HMRC’s own example is £25,000 of rent and £27,000 of self-employment income, which gives qualifying income of £52,000. That is more than £50,000, so on a 2024 to 2025 return it would mean starting MTD on 6 April 2026. The later thresholds are more than £30,000 from April 2027 and more than £20,000 from April 2028.

Employment pay, dividends, pensions and a partnership share are left out. If you own a property jointly, only your share of its income counts.

HMRC treats each self-employment as its own business, with its own digital records. If you are an electrician and a driving instructor, that is two sets of records. All your UK properties together, including your share of joint lets, form one UK property business.

So a sole trader who lets two flats has two businesses for MTD: the trade and the UK property business. A foreign property would be a third.

• Each self-employment: its own records and its own quarterly update.
• All UK property: one business, one set of records, one quarterly update.
• Foreign property: one separate business, with a record for each property.
• Everything: one tax return and one tax bill for the year.

You send a quarterly update for each business, and every business uses the same deadlines. Each update covers the tax year so far for that business only. HMRC never gets one combined update for everything.

HMRC’s guidance says a missed quarterly update deadline earns a penalty point for tax years after 2026 to 2027. HMRC gives only one point per deadline, even if updates for several businesses are late. For 2026 to 2027, HMRC says there are no penalties for missing a quarterly update deadline, but you must still send the updates before you can submit your tax return.

After the fourth updates, you make year-end adjustments for each business, add any other income such as savings or dividends, and submit one tax return. It is due by 31 January after the tax year ends.

HMRC’s calculation brings everything together. Your trading profit, your property profit, the tax reduction for residential finance costs and your other income all feed one tax bill. Payment dates do not change.

Payments on account, where they apply, are two payments of half of last year’s tax each, due on 31 January and 31 July. You do not make them if last year’s tax owed was less than £1,000, or if more than 80% of last year’s tax was paid outside Self Assessment. Any balancing payment is due on 31 January after the tax year ends.

HMRC’s £90,000 test for simpler categorisation looks at each income source separately. Your trade and your property business each need turnover under £90,000 to send one expenses total. One can be under and the other over.

In SimpleTaxFlow you answer the turnover question for each business and each tax year. Your trade might use Simple while a larger property business uses Detailed, or the other way round. Residential finance costs stay on their own line either way.

A fictional graphic designer also lets one flat they own on their own. They are in MTD because their turnover and rent, added together, were over the threshold on an earlier tax return. Both businesses are under £90,000, so both use Simple.

For 6 April to 5 July they send two updates by 7 August. The designer’s figures never mix with the flat’s.

When you connect HMRC, SimpleTaxFlow reads the businesses HMRC holds for you. Tax then lists each business with its own quarters and HMRC’s dates, so you can see what is due for the trade and for the property side.

Each update has its own figures. You can upload a spreadsheet for your trade and record the flat’s rent in Bookkeeping, or the other way round. Uploading again replaces only the last upload for that business and tax year. Spreadsheet import covers self-employment and UK property. For jointly owned property, use your own share of the rent and costs.

After you send, HMRC’s calculation covers both businesses together. Any estimate of ours is shown separately and labelled as an estimate.

Having two kinds of income doubles the chances of a mix-up. These are the usual ones.

Keeping a separate set of records for each business, from the first day of the tax year, avoids most of them.

• Testing each income against the threshold on its own instead of adding them together.
• Adding profits instead of turnover when working out qualifying income.
• Putting property costs in the trade’s records, or the other way round.
• Using two products for the same submission. HMRC allows one product for each separate submission.