If you receive rental income, Making Tax Digital for Income Tax changes the way you report that income to HMRC. Whether you own a single buy to let property or a portfolio of rentals across Greater Manchester and beyond, the rules affect how you keep records and how often you interact with HMRC each year. This guide explains what Making Tax Digital means specifically for landlords, how rental income counts toward the threshold and what steps you should be taking now.
Does Making Tax Digital Apply to Landlords?
Yes. Making Tax Digital for Income Tax applies to landlords with gross property income above the relevant threshold, in the same way it applies to self-employed sole traders. There is no separate landlord exemption. If your total gross rental receipts before expenses exceed the threshold for your mandation date, you will be required to comply.
The mandation dates and thresholds for landlords are:
- Gross rental income above £50,000 — mandatory from 6 April 2026
- Gross rental income above £30,000 — mandatory from 6 April 2027
- Gross rental income above £20,000 — mandatory from 6 April 2028
These thresholds apply to gross rental income before deducting any allowable expenses such as mortgage interest, letting agent fees, repairs and maintenance. It is your rental receipts that count, not your net profit.
How Does Rental Income Count Toward the MTD Threshold?
For the purposes of MTD for Income Tax, the threshold is based on your combined gross qualifying income from all sources. This includes both self-employment income and property income added together. If you are both a sole trader and a landlord, both income streams count toward the same threshold.
For example, if you receive £28,000 in gross rental income and earn £25,000 from your sole trader business, your combined qualifying income is £53,000. This puts you above the £50,000 threshold and you are in scope from April 2026, even though neither income stream on its own would exceed the threshold.
What About Landlords with Multiple Properties?
If you own multiple rental properties, all of the income from those properties is pooled together for the purposes of both the MTD threshold and your quarterly reporting obligations. HMRC treats all of your UK rental properties as a single property business, meaning you submit one set of quarterly updates covering your total rental income and expenses across the entire portfolio, rather than reporting each property separately.
What If You Are Both a Landlord and a Sole Trader?
While both income streams count toward the same threshold for the purposes of determining whether you are in scope, it is important to understand that your rental property business and your sole trader business are treated as two separate businesses for reporting purposes. This means you will need to submit two separate sets of quarterly updates to HMRC. One for your self-employment income and expenses and one for your property income and expenses.
This is one of the areas where having an accountant managing your MTD obligations can make a significant practical difference. At Affinity Associates Isaacs & Co, we help landlords and sole traders who operate both types of business to set up their record keeping and software correctly from the outset so that both sets of updates are handled accurately and on time.
What About Joint Ownership?
Where a property is jointly owned, each owner is taxed on their share of the rental income. For the purposes of the MTD threshold, only your share of the gross rental income counts toward your qualifying income total. So, if you and a partner own a property equally and it generates £60,000 in gross rent per year, your share is £30,000. Each joint owner is assessed individually against the MTD thresholds, and each has their own separate reporting obligations if they are in scope.
What Records Must Landlords Keep Digitally?
Under MTD for Income Tax, landlords will be required to keep digital records of all property income and expenses. Our Self-Assessment checklist covers the same ground for the annual return. The types of records that will need to be kept digitally include:
- Rental income received, including any advance or late payments.
- Allowable expenses such as mortgage interest, letting agent fees, insurance, repairs and maintenance costs.
- Mileage and travel costs related to the property business.
- Any other deductible costs associated with the management and maintenance of the rental portfolio.
Spreadsheets are acceptable for keeping these records. However, you will need MTD compatible software or bridging software to submit your quarterly updates to HMRC, as spreadsheets cannot submit directly. Bridging software is expressly permitted by HMRC provided all links in the process are digital rather than manually retyped.
What Does the Quarterly Update Process Look Like for Landlords?
Each update covers the tax year to date, running from 6 April up to 5 July, 5 October, 5 January and 5 April in turn. Submission deadlines fall on the 7th of the month following the end of each period: 7 August, 7 November, 7 February and 7 May.
The quarterly updates are not a tax payment, and they do not replace your annual Self-Assessment tax return. They are a short digital summary of your property business activity submitted to HMRC through your software. Your annual Self-Assessment tax return deadline of 31 January remains unchanged.
When Should Landlords Start Preparing?
The honest answer is now. Landlords with gross rental income above £50,000 have been mandated since 6 April 2026 and should already be keeping digital records and submitting quarterly updates. Even if you will not be in scope until April 2027 or 2028, beginning to keep more organised digital records now will make the eventual transition far smoother, and gives you time to select software, learn a new system and establish consistent record keeping habits across the portfolio.
At Affinity Associates Isaacs & Co, we advise landlords across Greater Manchester and beyond on their MTD obligations. Whether you need help assessing your threshold position, choosing the right software or managing your quarterly updates, get in touch and we will help you prepare.