MTD for Landlords UK: What Property Income Means for Your Compliance

Making Tax Digital for Income Tax (MTD ITSA) applies to landlords as well as sole traders. If you receive rental income from UK residential or commercial property and your qualifying income exceeds the relevant threshold, you will be required to keep digital records and submit quarterly updates to HMRC. This guide sets out what landlords need to know: who is affected, when, and what the practical obligations look like.

Does MTD ITSA Apply to Landlords?

Yes. MTD ITSA applies to any individual who receives income from property and is registered for Self Assessment, provided their qualifying income exceeds the relevant threshold. You do not need to be a sole trader. Rental income from UK property counts towards qualifying income in the same way as self-employment income.

HMRC's guidance confirms that qualifying income is the total gross income (before deducting expenses) from self-employment and property combined. If you have both a freelance income and rental income, both figures are added together.

The Three Phase Thresholds

The Phase 3 threshold and date are subject to parliamentary confirmation. The £50,000 and £30,000 thresholds are confirmed in law.

HMRC will review your Self Assessment return for the relevant tax year and write to you if your income exceeds the threshold. Even if you do not receive a letter, it remains your responsibility to check your position and sign up.

What Counts as Your Qualifying Income

Your qualifying income is your gross rental income before expenses. If your property generates £30,000 in rent but your allowable expenses bring the taxable profit down to £8,000, your qualifying income is still £30,000, not £8,000.

Joint ownership

If you jointly own a property, only your share counts. For example, if a property generates £60,000 in rental income and you and a partner each hold a 50% share, your qualifying income from that property is £30,000.

If you only receive notice of your share of the income after expenses have already been deducted (a less common arrangement), HMRC will assess that net figure.

Multiple properties

If you own multiple rental properties, the gross income from all of them is combined. You do not get a separate threshold per property.

Ceased income sources

If a property income source ceased after you submitted your last tax return but you still have at least one continuing source of self-employment or property income, the ceased source still counts towards your qualifying income for threshold assessment purposes.

What does not count

The following do not count towards qualifying income for MTD ITSA:

• Employment income (PAYE)
• Dividends (including those from your own company)
• Partnership profits received as an individual partner
• State Pension or private pension income
• Income from UK Real Estate Investment Trusts (REITs) or Property Authorised Investment Funds (PAIFs)

What Landlords Must Do Under MTD ITSA

1. Keep digital records

You must record all rental income and allowable expenses digitally using MTD-compatible software. Paper records and spreadsheets alone are not sufficient once you are in the system.

The digital records must capture each income and expense item as it occurs. HMRC does not receive individual transaction details, only the category totals from your quarterly updates.

2. Submit quarterly updates

You must submit four quarterly updates per tax year, one for each three-month period. The deadlines for 2026-27 are 7 August, 7 November, 7 February, and 7 May.

Each update covers your cumulative property income and expenses from 6 April to the end of that quarter. If you had no income or expenses in a quarter, you still need to submit to confirm this.

3. Submit a final declaration

After your fourth quarterly update, you finalise your Income Tax position and submit a final declaration. This replaces the traditional Self Assessment tax return. The deadline is 31 January following the end of the tax year (so 31 January 2028 for the 2026-27 tax year).

Jointly Let Properties: A Special Rule

If you have jointly let properties, you can choose in your quarterly updates to include either:

• All property income and expenses for those properties, or
• Only the income, excluding expenses

If you exclude expenses from jointly let properties in your quarterly updates, you must report those expenses before submitting your final declaration. You cannot omit them entirely.

For any properties you solely own, you must always include both income and expenses in your quarterly updates.

What Software Do You Need?

You need software that appears on HMRC's list of compatible products for MTD ITSA. The major options used by landlords include Xero, QuickBooks, FreeAgent, and Sage. All four support landlords with property income.

For a side-by-side comparison of the main options including pricing and features, see the compatible software section of our MTD guide. If you are comparing Xero and QuickBooks specifically, read our Xero vs QuickBooks for MTD comparison.

Exemptions That May Apply to Landlords

Some landlords are automatically exempt from MTD ITSA:

• Qualifying income at or below £20,000: No obligation until the threshold changes.
• Jointly owned properties where your share keeps you below the threshold: You are assessed on your share only.
• Certain trust-related income: Trustees and personal representatives are automatically exempt in those capacities.

You can apply for a digital exclusion exemption if age, disability, health condition, or lack of internet access in your location makes it unreasonable for you to use compatible software. Preference for paper or unfamiliarity with software is not accepted as grounds for exemption.

Opting Out After Joining

Once required to use MTD ITSA, you cannot simply stop. However, if your qualifying income falls below the relevant threshold for three consecutive tax years, you can choose to opt out via your HMRC online services account.

What This Means for You

If your gross rental income (combined with any self-employment income) exceeded £50,000 in the 2024-25 tax year, you need to be signed up and using compatible software from 6 April 2026. That date is weeks away. If you are in the £30,000-£50,000 band, your compliance date is April 2027.

Start by confirming your qualifying income, then choose and trial your software before the deadline arrives. For a step-by-step preparation checklist covering software selection, record setup, and HMRC sign-up, see our complete MTD for Income Tax guide.

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DigiTaxHub.co.uk is an independent information resource and is not affiliated with or endorsed by HMRC. This article is for information purposes only and does not constitute tax or financial advice. Always verify current rules at GOV.UK and speak to a qualified accountant if you are unsure.