If you receive rental income from UK property and your total qualifying income exceeds £50,000, Making Tax Digital for Income Tax applies to you from 6 April 2026. That means digital record-keeping, quarterly updates to HMRC, and compatible software.
This guide covers everything landlords specifically need to know - from which income counts and what expenses you can claim, to how the quarterly updates actually work and which software makes the most sense for property income.
Quickly check your eligibility: Use our free MTD eligibility checker — enter your rental income and any self-employment income to get an instant answer.
Does MTD apply to me as a landlord?
MTD for Income Tax applies from April 2026 if your total qualifying income exceeds £50,000. Qualifying income includes your gross rental income from all UK properties combined, plus any self-employment income if you also have that.
A few important clarifications for landlords:
It's gross income, not profit. If your properties generate £55,000 in rent but after mortgage interest, repairs, and other expenses your profit is only £20,000, you're still in scope because the £50,000 threshold is based on gross income.
All properties count as one business. If you have three buy-to-let properties, HMRC treats them as a single property business. You don't file separately for each property - you report the combined income and expenses.
Joint ownership matters. If you co-own a property with a spouse or partner, only your share of the income counts towards the threshold. A property generating £80,000 in rent owned 50/50 means £40,000 each - below the £50,000 threshold.
Limited company landlords are not affected. MTD for Income Tax applies to individuals, not companies. If your properties are held through a limited company, MTD ITSA doesn't apply to the company itself (though Corporation Tax has its own digital requirements).
From April 2027: The threshold drops to £30,000. If your gross rental income is between £30,000 and £50,000, you have one extra year before MTD becomes mandatory for you.
What do I need to report each quarter?
Each quarterly update includes your cumulative rental income and allowable expenses for the year so far. You're reporting for your entire property business, not property by property.
For income, this is straightforward: total rent received across all properties during the period.
For expenses, you can either submit a single consolidated expenses figure (if your total property income is under £90,000) or break expenses down into categories. Most landlords under the threshold will find consolidated expenses simpler.
Remember that quarterly updates are cumulative. Your Q2 update includes Q1 figures. Your Q3 update includes Q1, Q2, and Q3. Each submission replaces the previous one, so you're always reporting your year-to-date position.
Allowable expenses for landlords
If you choose to itemise your expenses (rather than using the consolidated single figure), these are the categories HMRC uses for property businesses:
Repairs and maintenance
Fixing the boiler, repainting, replacing a broken window. Must be repairs, not improvements.
Finance costs
Mortgage interest gets a 20% tax credit rather than a full deduction. Reported separately.
Professional fees
Accountant fees, legal costs for renewals or disputes (not purchase costs).
Insurance
Landlord insurance, buildings insurance, rent guarantee insurance.
Letting agent fees
Management fees, tenant-finding fees, inventory costs.
Ground rent and service charges
If the property is leasehold.
Utility costs
Only if you pay them (e.g. between tenancies or if included in rent).
Travel costs
Visiting properties for inspections, maintenance, or letting viewings. Mileage at 45p/mile for the first 10,000 miles.
Replacement of domestic items
Replacing furniture, appliances, or fixtures in a furnished let. The relief covers the cost of the replacement minus any proceeds from the old item.
Other allowable costs
Advertising for tenants, stationery, phone calls, Council Tax (if you pay it between tenancies).
Repairs vs improvements: This is the most common area of confusion. Replacing a broken kitchen tap is a repair (allowable). Replacing the entire kitchen with a higher-spec one is an improvement (not deductible as a revenue expense, but may qualify for capital allowances). Like-for-like replacements are generally treated as repairs.
Mortgage interest - the special case
Since April 2020, individual landlords can no longer deduct mortgage interest as an expense. Instead, you receive a 20% tax credit on your finance costs. This means mortgage interest is reported separately from other expenses in your MTD submissions.
Your quarterly update will include a separate field for property finance costs. This doesn't reduce your reported profit directly - instead, it's used to calculate your tax credit at the end of the year.
For higher-rate taxpayers, this change means you're effectively paying 40% tax on rental profit but only getting 20% relief on mortgage interest. It's one of the reasons many landlords have moved properties into limited companies, but for those who haven't, it's an important part of getting your MTD submissions right.
What does the quarterly cycle look like for a landlord?
Here's a practical example. Say you have two buy-to-let properties earning a combined £4,500/month in rent (£54,000/year), with annual expenses of around £18,000.
| Quarter | What you report | Deadline |
|---|---|---|
| Q1 (Apr - Jul) | £13,500 income, ~£4,500 expenses (year to date) | 7 August |
| Q2 (Apr - Oct) | £27,000 income, ~£9,000 expenses (year to date) | 7 November |
| Q3 (Apr - Jan) | £40,500 income, ~£13,500 expenses (year to date) | 7 February |
| Q4 (Apr - Apr) | £54,000 income, ~£18,000 expenses (year to date) | 7 May |
| Final declaration | Confirmed annual figures + adjustments | 31 January |
Each quarter, you're adding the latest figures to your running total. The numbers don't need to be perfect - quarterly updates are estimates that you can adjust in later quarters or in the final declaration.
What if I have rental income AND self-employment income?
Many landlords also have self-employment income. You might run a small business and own a rental property. Under MTD, both income sources are reported through the same software, but they're treated as separate businesses with separate quarterly updates.
This is where some free software options fall short. Sage's free tier only handles self-employment. Hammock only handles property. If you have both, you'd need either two products (not ideal) or a single product that supports both income types.
When choosing software, make sure it explicitly supports UK property income - not just self-employment. Check the GOV.UK software list (or see our full price comparison), which shows each product's supported income types.
What software should landlords use?
For most landlords, the choice comes down to three approaches:
If you only have property income and a single property: Hammock offers a free tier specifically for landlords that covers MTD quarterly submissions. RentalBux is free for one property with full MTD compliance. Either of these is a solid choice if your needs are simple.
If you have multiple properties or property plus self-employment: You need software that supports both income types and doesn't restrict you to a single property. Bridging software at £20-£24/year handles this without the cost of a full accounting platform. Full platforms like Xero (£180/year) and FreeAgent (£288/year) also work but are substantially more expensive.
If you want help categorising expenses: AI-powered bridging software can automatically sort your bank transactions into the correct HMRC expense categories - repair costs, insurance, agent fees, and so on. This saves time and catches things you might miss.
Record keeping tips for landlords
Even before MTD, HMRC expected landlords to keep records of income and expenses. MTD just requires those records to be digital. If you're already using a spreadsheet, you're compliant with the record-keeping requirement.
A good landlord spreadsheet tracks rent received per property per month, mortgage interest payments, insurance premiums, repair and maintenance invoices, agent fees and commissions, travel to properties (date, destination, mileage), and any other expenses. Keep it simple. One tab per tax year, with columns for date, description, category, and amount.
Keep receipts and invoices. HMRC can ask for evidence of any claimed expense. Digital copies (photos of receipts, PDF invoices) are fine - you don't need paper originals.
What about the Furnished Holiday Lettings (FHL) changes?
From April 2025, the Furnished Holiday Lettings tax regime was abolished. If you previously benefited from FHL treatment (which allowed mortgage interest to be deducted as a full expense, among other benefits), your property income is now treated the same as any other residential let.
This means FHL properties are subject to the same mortgage interest tax credit rules and the same MTD reporting requirements as standard buy-to-let properties. If you relied on FHL status for capital allowances or pension contribution calculations, speak to your accountant about how this affects your position.
MTD for landlords - from free
Both self-employment and property income supported. Upload your spreadsheet, review the figures, submit. Free for the 2026-27 tax year, then just £19.99/year - the cheapest MTD software in the UK.
Join the WaitlistLast updated March 2026. Tax rules change frequently - consult a qualified accountant for advice specific to your situation. Check GOV.UK for the latest MTD guidance.