Making Tax Digital (MTD) for landlords requires property investors to keep digital records and submit quarterly updates to HMRC using compatible software. MTD for Income Tax Self Assessment (MTD ITSA) begins 6 April 2026 for landlords with gross rental income over £50,000, and 6 April 2027 for those earning over £30,000.
This guide covers everything landlords need to know about MTD compliance for property income.
When Does MTD Apply to Landlords?
MTD applies based on your gross rental income before deducting expenses:
| Your Gross Rental Income | MTD Start Date | First Quarterly Submission | |--------------------------|----------------|---------------------------| | Over £50,000 | 6 April 2026 | 7 August 2026 | | Over £30,000 | 6 April 2027 | 7 August 2027 | | Under £30,000 | TBC (likely 2028+) | Not yet required |
What Counts as Gross Rental Income?
Gross income means total rent received before deducting any expenses:
| Included | NOT Included | |----------|--------------| | Rent payments from tenants | Property expenses | | Airbnb/short-term rental income | Mortgage payments | | Service charges passed to you | Letting agent fees | | Insurance claim payouts | Repairs and maintenance | | Grants received | Your time/labour |
Example: You receive £55,000 rent across three properties but spend £18,000 on mortgage interest, repairs, and agent fees. Your gross income is £55,000—you must comply from April 2026.
Combined Income Sources
If you have both property income AND self-employment income, they're combined:
| Income Source | Amount | |---------------|--------| | Rental income | £35,000 | | Self-employment | £20,000 | | Combined gross | £55,000 |
This landlord must comply from April 2026, even though neither income alone exceeds £50,000.
Learn more: MTD Income Thresholds Explained
What MTD Requires from Landlords
1. Digital Record Keeping
Maintain digital records of all property transactions:
| Record Type | What to Track | |-------------|---------------| | Rental income | Date, amount, property, tenant for each payment | | Property expenses | Date, amount, category, property for each expense | | Mortgage interest | Monthly interest payments (for Section 24 credit) |
2. HMRC-Recognised Software
Your software must be on HMRC's recognised list and must:
- Store property records digitally
- Handle SA105 (property income) calculations
- Calculate Section 24 tax credit correctly
- Submit quarterly updates via the MTD API
TaxFolio handles both SA103 (self-employment) and SA105 (property) in one account.
3. Quarterly Submissions
Submit property income and expense summaries four times per year:
| Quarter | Period | Deadline | |---------|--------|----------| | Q1 | 6 April – 5 July | 7 August | | Q2 | 6 July – 5 October | 7 November | | Q3 | 6 October – 5 January | 7 February | | Q4 | 6 January – 5 April | 7 May |
4. Final Declaration
By 31 January, confirm your complete property income figures for the tax year, including:
- Total rental income
- All allowable expenses
- Mortgage interest (for Section 24 credit)
- Any adjustments
Property Expenses Under MTD
Your quarterly submissions include property expenses by category:
Fully Deductible Expenses
| Category | Examples | |----------|----------| | Letting agent fees | Management fees, tenant finding | | Repairs and maintenance | Fixing boilers, repainting, plumbing | | Insurance | Buildings, contents, landlord liability | | Ground rent and service charges | Leasehold property costs | | Accountant fees | Tax return preparation | | Legal fees | Tenancy agreements, evictions | | Advertising | Finding tenants | | Travel | Visiting properties (mileage at 45p/mile) | | Utilities | If landlord pays (not usually) | | Council tax | During void periods |
Section 24: Mortgage Interest
Mortgage interest is not deducted as an expense. Instead:
- Record mortgage interest payments in your software
- Pay tax on rental profit (income minus other expenses)
- Receive a 20% tax credit on mortgage interest
Example: | Item | Amount | |------|--------| | Rental income | £24,000 | | Allowable expenses | £4,000 | | Taxable rental profit | £20,000 | | Tax at 40% (higher rate) | £8,000 | | Mortgage interest paid | £10,000 | | Section 24 credit (20%) | −£2,000 | | Final tax | £6,000 |
Learn more: Section 24 Mortgage Interest Explained
Capital vs Revenue Expenses
| Deductible (Revenue) | NOT Deductible (Capital) | |---------------------|-------------------------| | Repairs (like-for-like) | Improvements | | Replacing broken items | Extensions | | Repainting | New kitchen (upgrade) | | Fixing roof leaks | Loft conversion |
Capital expenditure may qualify for capital allowances on certain items, but generally property improvements are only relieved when you sell (reducing Capital Gains Tax).
Multiple Properties Under MTD
If you own several rental properties, MTD treats them as one property business:
How to Report Multiple Properties
- Single quarterly submission covering all properties
- Combined income from all properties
- Combined expenses across the portfolio
- Separate tracking (optional but recommended) for your own records
Your MTD software should allow you to tag transactions by property while submitting combined totals to HMRC.
Property-by-Property Records
While HMRC receives combined figures, keep detailed records per property:
| Property | Income | Expenses | Mortgage Interest | Profit | |----------|--------|----------|-------------------|--------| | 14 Oak Lane | £12,000 | £2,400 | £4,800 | £4,800 | | Flat 3, The Heights | £9,600 | £1,800 | £3,600 | £4,200 | | 27 Mill Road | £14,400 | £3,200 | £6,000 | £5,200 | | Total | £36,000 | £7,400 | £14,400 | £14,200 |
This helps you:
- Identify underperforming properties
- Make investment decisions
- Defend figures if HMRC enquires
MTD Timeline for Landlords
If Rental Income Exceeds £50,000 (First Wave)
| Date | Action | |------|--------| | Now | Choose MTD software, set up property tracking | | Before 6 April 2026 | Ensure all properties are recorded digitally | | 6 April 2026 | MTD begins | | 7 August 2026 | First quarterly submission | | 31 January 2028 | Final declaration for 2026/27 |
If Rental Income Exceeds £30,000 (Second Wave)
| Date | Action | |------|--------| | 2026 | Observe first wave, prepare | | Before 6 April 2027 | Set up MTD software | | 6 April 2027 | MTD begins | | 7 August 2027 | First quarterly submission |
Landlord-Specific MTD Considerations
Letting Agent Statements
Many landlords receive monthly statements from letting agents showing:
- Rent collected
- Agent fees deducted
- Repairs arranged
- Net amount paid to you
For MTD, record:
- Gross rent (before agent fees)
- Agent fees as a separate expense
- Repairs arranged by the agent as separate expenses
Void Periods
Empty periods between tenants require special handling:
| During Voids | Treatment | |--------------|-----------| | No rental income | Record £0 income for that period | | Council tax (if landlord pays) | Deductible expense | | Utilities (if landlord pays) | Deductible expense | | Marketing for new tenants | Deductible expense | | Mortgage interest | Still record for Section 24 credit |
Furnished vs Unfurnished
The Wear and Tear Allowance was replaced by Replacement Furniture Relief:
- Old rule: 10% of rent deduction for furnished properties
- Current rule: Deduct actual cost of replacing furnishings (like-for-like)
MTD software should track replacement furniture costs separately.
Rent a Room Scheme
If you rent a room in your main home:
- Under £7,500/year: Tax-free, no MTD requirement for this income
- Over £7,500/year: Excess is taxable; include in MTD if above threshold
The Rent a Room income counts towards the MTD threshold if it exceeds £7,500.
Holiday Lets (FHL)
Furnished Holiday Lets historically had different tax treatment. From April 2025, FHL rules are changing—the separate regime is being abolished.
From April 2025:
- FHL income treated the same as regular rentals
- Section 24 mortgage interest restrictions apply
- Include in MTD calculations like other property income
Example: Landlord MTD Year
David: Portfolio Landlord (3 properties)
Gross Rental Income: £54,000 (above £50,000 threshold)
Q1 (6 April – 5 July 2026):
| Property | Rent Received | Expenses | Mortgage Interest | |----------|---------------|----------|-------------------| | Property A | £4,500 | £380 | £1,200 | | Property B | £3,600 | £520 | £900 | | Property C | £5,400 | £290 | £1,500 | | Total | £13,500 | £1,190 | £3,600 |
Q1 Summary for HMRC: | Item | Amount | |------|--------| | Total rental income | £13,500 | | Total allowable expenses | £1,190 | | Property profit | £12,310 | | Finance costs (for credit) | £3,600 |
David submits this via TaxFolio by 7 August 2026.
Full Year: | Quarter | Income | Expenses | Finance Costs | Profit | |---------|--------|----------|---------------|--------| | Q1 | £13,500 | £1,190 | £3,600 | £12,310 | | Q2 | £13,500 | £2,840 | £3,600 | £10,660 | | Q3 | £13,500 | £980 | £3,600 | £12,520 | | Q4 | £13,500 | £1,350 | £3,600 | £12,150 | | Total | £54,000 | £6,360 | £14,400 | £47,640 |
Tax Calculation (Final Declaration): | Item | Amount | |------|--------| | Property profit | £47,640 | | Personal Allowance | −£12,570 | | Taxable income | £35,070 | | Tax at 20% | £7,014 | | Section 24 credit (20% × £14,400) | −£2,880 | | Tax payable | £4,134 |
Preparing Your Property Records for MTD
Step 1: List All Properties
Create a record for each property:
- Address
- Purchase date
- Mortgage details (lender, balance, interest rate)
- Letting agent details
- Current tenant
Step 2: Gather Historical Records
Collect for at least the current tax year:
- Rent receipts or agent statements
- Expense invoices and receipts
- Mortgage statements (showing interest portion)
- Insurance documents
Step 3: Set Up Property Tracking
In your MTD software:
- Add each property
- Link bank accounts where rent is received
- Set up expense categories
- Record opening mortgage balances
Step 4: Categorise Existing Transactions
Review bank transactions and categorise:
- Rent received (by property if possible)
- Agent fees
- Repairs and maintenance
- Insurance payments
- Other property expenses
Limited Company vs Personal Ownership
MTD for Income Tax applies to individual landlords, not limited companies.
| Factor | Personal Ownership | Limited Company | |--------|-------------------|-----------------| | MTD ITSA | Applies (if above threshold) | Does not apply | | Section 24 | Applies (20% credit only) | Does not apply (full deduction) | | Corporation Tax | N/A | 25% on profits | | Extracting profits | Direct access | Dividends (taxed again) | | Mortgage products | Personal BTL rates | Commercial rates (often higher) |
Some landlords consider incorporating to avoid Section 24 and MTD complexity. However, incorporation involves:
- Stamp Duty Land Tax on transfer
- Legal and accounting costs
- Different (often more expensive) mortgages
- Additional tax when extracting profits
Consult an accountant before incorporating—it's not beneficial for everyone.
Learn more: Landlord Tax Guide
MTD Software for Landlords
Choose software that handles property-specific needs:
| Feature | Why It Matters | |---------|----------------| | SA105 support | Required for property income reporting | | Multiple property tracking | Manage portfolio in one place | | Section 24 calculations | Automatic tax credit computation | | Letting agent integration | Import statements easily | | Mortgage interest tracking | Separate from other expenses |
Get MTD-Ready with TaxFolio
TaxFolio is HMRC-recognised MTD software built for UK landlords:
- Property income tracking — manage multiple properties
- Section 24 automation — mortgage interest correctly handled
- Open Banking — import rent and expenses automatically
- AI categorisation — property expenses sorted correctly
- Quarterly submissions — one-click filing to HMRC
- SA105 compliant — property pages handled automatically
- From £69.99/year — no monthly fees
Start your free 30-day trial and be ready for MTD before April 2026.