Making Tax Digital for Income Tax for landlords: Answers to frequently asked questions

As a landlord, the way that you do your accounting related to property income might be changing from April 2026.

Rather than submitting Self Assessment tax returns, you may need to follow Making Tax Digital for Income Tax rules.

To help you understand the new requirements and what they means for landlords, in this article we cover an overview of what Making Tax Digital for Income Tax is, and share answers to questions you may have about it.

Here’s what we cover:

Making Tax Digital: An overview for landlords

Making Tax Digital for Income Tax is part of the UK government’s long-running plans to digitalise the tax system.

Doing so makes life easier for individuals and businesses who, because their records are digital, get improved visibility into their finances. This empowers better decision-making and early identification of issues.

Since 2019, the Making Tax Digital (MTD) programme required VAT-registered businesses over the VAT threshold (then £85,000) to use software for their VAT accounting.

Since April 2022, this requirement was extended to all VAT-registered businesses, regardless of turnover.

As of April 2026, many individuals currently using Self Assessment will be required to switch to using MTD for Income Tax for their income tax accounting and reporting.

This includes landlords, but only those whose income from their property or properties (e.g. rent) exceeds £50,000 per year.

This threshold drops to £30,000 in April 2027 and then to income above £20,000 from April 2028.

Making Tax Digital for Income Tax also affects sole traders.

If a landlord is a sole trader too, then the income from the sole trader business(es) they own, plus the income from properties, are added together for the purpose of determining if that individual is mandated for Making Tax Digital for Income Tax.

If you’ve put your properties into a limited company then, obviously, corporation tax is due on the property income. Therefore, the rental income will not count for the purposes of MTD for Income Tax. Dividend incomes are not currently covered by MTD for Income Tax, so you should continue using Self Assessment for that.

What do landlords need to do for Making Tax Digital for Income Tax?

If you’re within its scope, the rules of MTD for Income Tax are as follows:

• Software compatible with MTD for Income Tax must be used for your income tax accounting. All accounting records related to income tax, such as the details from invoices and expenses, must be stored digitally and retained for five years following the end of the tax year. Note that you may need to activate the MTD for Income Tax functionality within your software—speak to your software vendor in advance to ensure compliance.
• You or your accountant must register you for MTD for Income Tax before 6 April 2026, if your income is more than £50,000. If you’re already registered for Self Assessment, or have already registered for MTD for VAT, you won’t be transferred across automatically when MTD for Income Tax begins.
• You’ll no longer need to send a Self Assessment return for income tax. Instead, there are new quarterly update and digital tax return requirements, as detailed below.
• You must submit quarterly updates to HMRC using MTD compatible software. You can send more than quarterly updates if it helps your situation. While there’s no legal requirement for the updates to be fully accurate, it should include all relevant income and expenses to the best of your knowledge. Providing accurate information can help you better estimate your tax and National Insurance liability. If you let property in the UK and abroad, separate updates must be submitted for UK properties and foreign properties.
• By 31 January following the end of the tax year, you must use the MTD software to create and sign a tax return. If you have any income from a sole trader business, this will need to be included too.
• By 31 January, you’ll need to pay the balance of any tax and National Insurance contributions due. Note that the payment on account system will continue, so you may need to make a further payment on 31 July of the same year.

How do landlords work out their income for Making Tax Digital for Income Tax?

If you’re not a sole trader, all you need do is calculate the rental income you receive from the one or more of the properties you own (or have a share in).

Your property income can include the following:

• Rental income from UK land or property
• Rental income from foreign land or property
• Income from letting furnished rooms in your own home
• Income from Furnished Holiday Lettings (FHL) and Non-Furnished Holiday Lettings (non-FHL) in the UK
• Premiums from leasing UK land
• Inducements to take an interest in letting a property (a reverse premium).

If this total income you receive from property is more than £50,000 from April 2026, £30,000 from April 2027, or £20,000 from April 2028, you must register for and use MTD for Income Tax for your property income.

If you’re a sole trader who uses Self Assessment for other businesses unrelated to being a landlord, it’s a little more complicated.

To work out your income for the purposes of MTD for Income Tax, the rental income should be combined with income from any sole trader businesses you own.

If the total comes to more than £50,000, you need to register for and use MTD for Income Tax for accounting relating to income from your property rental, as well as from your business(es).

Here’s some examples:

• Individual A has a property that brings in rental income of £52,000 per year. This is above the initial £50,000 threshold for April 2026 so they will need to use Making Tax Digital for Income Tax for the accounting relating to their property. Additionally, if they carry on employment as a sole trader, they’ll need to use Making Tax Digital for Income Tax for the accounting relating to this, too.
• Individual B inherited a property that is rented for £49,000 a year. They have full-time employment and pay tax and National Insurance through their employer’s payroll. Because their income from property is below £50,000, they do not need to use it. Instead, they should continue using the Self Assessment system.
• Individual C is a buy-to-let landlord with a property that brings in £48,000 in income through rents each year. They work as a sole trader, with an income of £9,000. The aggregated income is £57,000, which is above the £50,000 threshold. They are required to use Making Tax Digital for Income Tax.

What information do landlords need to send as part of Making Tax Digital for Income Tax?

There’s no real change to the kind of information you’ll need to provide compared to completing a Self Assessment tax return.

For example, you’ll still need to declare your income, and where it came from. You’ll still need to declare your allowable expenses.

The difference is you’ll need to provide this information to HMRC more frequently (at least quarterly), and via MTD-compatible software.

How do landlords sign up to Making Tax Digital for Income Tax?

Although you might be able to join the Making Tax Digital for Income Tax beta programme, you can’t currently sign up to the full Making Tax Digital for Income Tax scheme.

This beta allows landlords to familiarise themselves with the system before it becomes mandatory.

It’s anticipated HMRC will open the portal to sign up to Making Tax Digital for Income Tax closer to the 6 April 2026 mandation date as it’s still in the testing phase.

Should landlords join the Making Tax Digital for Income Tax beta?

Signing up to MTD for Income Tax ahead of time via the beta scheme certainly makes sense if it’s right for you.

You’ll get a chance to get to grips with the requirements and any new software as required, and make use of HMRC’s support services before they become overwhelmed because millions of people are signing up.

If you use an accountant, speak to them ahead of signing up for MTD for Income Tax, because they might need to update their systems too.

There are some limitations as to who can sign-up to the beta programme. Some of those pertinent to landlords are as follows:

• You must be up to date with your taxes, including payments.
• You must be UK resident.
• You can’t claim Married Couple’s Allowance or Blind Person’s Allowance.
• You can’t be insolvent, or about to be so, or subject to a compliance enquiry.

I don’t run a business. I receive rental income from a single inherited property. Does Making Tax Digital for Income Tax apply for me?

Yes, if your annual rental income is above £50,000 on 6 April 2026, £30,000 on 6 April 2027, or £20,000 on 6 April 2028.

If you rent out property, then HMRC considers you to be running a business. It doesn’t matter if you’re employed full time doing something else and already pay taxes that way.

Your work as a landlord might be part time, only letting a holiday property, or even something that demands hardly any of your time, but the income must still be declared.

I receive income from shares in a Real Estate Investment Trust (REIT). Does Making Tax Digital for Income Tax affect me?

No. As of MTD for Income Tax’s launch in 2026, only rental income from property ownership will be considered to be within scope.

Income from shares in a REIT is considered investment, not rental income. As such, it’s not within the scope of MTD for Income Tax.

I’m a buy-to-let landlord. Does Making Tax Digital for Income Tax affect me?

Yes—if the rental income you receive personally is more than £50,000 (or is above £50,000 when combined with sole trader income) from April 2026, £30,000 from April 2027, or £20,000 from April 2028, then MTD for Income Tax applies.

If your buy-to-let properties are owned by a limited company you set up for the purpose, MTD for Income Tax won’t apply.

Are Furnished Holiday Lettings (FHLs) included in Making Tax Digital for Income Tax?

The government announced as part of the 2024 Spring Budget that the FHL scheme would be abolished from 6 April 2025.

This was confirmed following the most recent general election and means income from FHL is treated the same as other property income for tax purposes, and the separate FHL rules no longer apply.

I jointly own a rental property with another person. How is this handled for MTD for Income Tax?

Put simply, there are no significant changes compared to how joint landlords already handle sharing income and expenses for Self Assessment.

Married couples jointly owning a rental property will split income and expenses 50/50, and their share of the income will be considered for the purposes of MTD for Income Tax. Note that only the individual’s share of the income is considered, and not the total income from the property.

Other types of shared ownership outside marriage will likely have an existing split for income and expenses which again will be carried across to any MTD for Income Tax considerations.

If your share of the income from property rental (plus any sole trader businesses) takes you above the MTD for Income Tax threshold then you must follow the MTD for Income Tax rules. You will then use this share of the income (again, not the total income from the property) for quarterly updates and the final tax return.

This means that, with joint ownership, both owners may need to use separate MTD-compatible software if they’re required to follow the MTD for Income Tax rules.

Is rental income from foreign (non-UK) property I own included in Making Tax Digital for Income Tax?

Yes, if you are domiciled in the UK, and your rental income is above either threshold (as mentioned above, if you’re a sole trader then income from your business also contributes to this threshold).

Any foreign income, including property rental, must be reported separately to your UK income. This means separate quarterly updates.

For those not domiciled in the UK, only UK self-employment or UK property income counts toward the MTD qualifying threshold.

As with the existing Self Assessment scheme, you may be able to claim double tax relief if the income is also taxed in the country where your property is.

Does Making Tax Digital for Income Tax apply to rental income from flats/apartments?

If the rental income is over the threshold (or is above it when combined with sole trader income) then MTD for Income Tax applies.

No distinction is made for the type of property.

Whether the property is furnished or unfurnished has no bearing on MTD for Income Tax either. It’s solely about the rental income an individual receives and for which income tax is therefore due.

Similarly, income from commercial lets is also within scope of MTD for Income Tax if the threshold is breached and that property is owned by an individual (or more than one person).

If I sell or dispose of a property, does the income count towards Making Tax Digital for Income Tax?

That would typically be classed as a capital gains tax, so is outside the scope of MTD for Income Tax. Speak to an accountant if you’re in any doubt.

I’m already registered for Making Tax Digital for VAT. Do I need to register for and/or use Making Tax Digital for Income Tax?

Yes, if your property income is above the threshold (either on its own or combined with your income from sole trader businesses you own).

MTD for VAT and MTD for Income Tax are independent of each other. They apply to different types of tax.

I own a share of a property and receive a share of the rental income. Does Making Tax Digital for Income Tax apply?

HMRC has introduced easements for joint property owners under MTD for Income Tax.

These allow joint owners to report gross rental income in their quarterly updates and provide expense details during the year-end finalisation.

Furthermore, joint owners can maintain a single digital record for each category of income and expense related to the jointly held property, simplifying the reporting process.

MTD for Income Tax will apply if this income is above the threshold (either on its own or combined with your income from sole trader businesses you own).

Does the Making Tax Digital for Income Tax threshold apply to each property?

MTD for Income Tax thresholds apply to your total income. It doesn’t matter if this income is from one small flat or a portfolio of houses, it’s the total income that’s used in the calculation.

The income threshold applies to your personal income for which income tax might be deducted —whether that’s from rental income, or income from any sole trader business(es) you own.

Is it just rental income from property that’s considered for Making Tax Digital for Income Tax?

If you keep any tenancy deposit for repairs then, as currently, this will be considered income and then whatever you spend on the repair could be considered an allowable expense.

As for other types of regular income from a property, it’s not yet clear. There might cases where ongoing royalties on mineral rights are received, for example.

These might need to be included alongside rental income, but you’ll have to consult the wording of the MTD for Income Tax legislation to be sure.

My properties are owned by an incorporated company, from which I pay myself a salary and/or dividend. Does Making Tax Digital for Income Tax apply?

In short, it’s unlikely MTD for Income Tax will apply.

Since the properties are owned by the incorporated company, corporation tax will apply to the rental income.

If you’re employed by the company, and your salary is paid through its payroll (PAYE), MTD for Income Tax will not apply to your salary.

Dividends from the company should be reported and paid through the usual Self Assessment route and are not within scope of MTD for Income Tax at the present time.

If any property is disposed of, the income would be considered a chargeable gain for corporation tax purposes.

Can I leave it to my accountant to handle Making Tax Digital for Income Tax for my properties?

Yes and no.

You’ll need to use software for your accounting relating to income tax. That can’t be avoided.

Considering the admin time savings modern cloud accounting software offers, this is something that should be embraced.

However, you can still rely on an accountant to work out your quarterly updates and tax return each year. They’ll be able to help you make any necessary adjustments and reliefs.

They can submit the quarterly updates for you, but you’ll still need to review and sign the tax return.

Irrespective of whether you calculate and submit the quarterly updates and end of year totals, or your accountants does this for you, as the taxpayer you remain responsible for ensuring the information is submitted and for any tax that may be due.

I’m new to being a landlord, having only just purchased or inherited a property. When will Making Tax Digital for Income Tax apply to me?

In theory, if your property income is over £50,000 then MTD for Income Tax applies (with the sole trader proviso, as above) from 6 April 2026, £30,000 from 6 April 2027, or £20,000 from 6 April 2028.

However, the reality is that nobody goes straight into following the MTD for Income Tax rules. New landlords or new sole traders first have to register for Self Assessment and complete a tax return. Based on the gross income you declare, HMRC might then decide you should use MTD for Income Tax, but you won’t be required to do so until the start of the next tax year.

In other words, you’ll have to undertake two full years of Self Assessment.

You can sign up voluntarily to MTD for Income Tax after you’ve started Self Assessment. This can be done even if your income does not reach the threshold for inclusion. You’d then start MTD for Income Tax at the start of the next tax year, but you’ll still have to complete a year of Self Assessment.

If I have to keep a tenancy deposit to pay for repairs, is it included in my Making Tax Digital for Income Tax calculations?

Yes, but only if you don’t return any of it to the tenant.

It will be considered income and then whatever you spend on the repair could be considered an allowable expense.

If in doubt, consult an accountant.

How to get started with Making Tax Digital for Income Tax if you’re a landlord

Making Tax Digital might sound daunting but it doesn’t have to be the case.

Here are the steps to get started with it:

1. Sign up ahead of time

The start date for those accounting for income for property through MTD for Income Tax is 6 April 2026. This is known as the digital start date and rental income received after this date must be accounted for using MTD for Income Tax.

2. Consider joining the beta

This lets you sign up for MTD for Income Tax earlier than the mandated digital start date.

Your Self Assessment returns and payments must be up to date. See above: Should landlords join the MTD for Income Tax beta?

3. Update to accounting software that’s ready for MTD for Income Tax

You must use software for your accounting relating to income tax, and it needs to be compatible with MTD for Income Tax.

You should ensure any software you use is updated in time. You might find that some older accounting packages won’t be updated.

Cloud accounting software will almost certainly be updated well in time—but consult your software vendor to check.

If you use separate software for managing property income, you’ll need to ensure it’s digitally linked to your MTD-compatible accounting software. Note that copying or cutting and pasting accounting data between two places isn’t permitted under the MTD for Income Tax rules, which can create issues when using spreadsheets to track things like depreciation of furnishings.

4. Here’s the initial timeline of requirements for landlords using MTD for Income Tax from April 2026

This is a minimum list of requirements.

You can make more than quarterly updates, for example, if that suits your admin processes. And remember that you may need to make additional updates, not listed below, if you also have any sole trader businesses:

• Before April 2026, sign up for MTD for Income Tax (assuming you haven’t already signed up to the beta). Potentially upgrade your accounting to MTD for Income Tax-compatible software and inform your accountant.
• For those in the beta, you should be able to submit your quarterly returns for the 2025/26 tax year through MTD as usual.
• For those submitting Self Assessment tax returns, the 2024/25 tax year’s final income amount will determine if you might already fall into the scope of MTD for the 2026/27 tax year. HMRC will inform you by writing if this is the case.

HMRC has outlined the deadlines for quarterly submissions as follows:

Update period	Update deadline
6 April to 5 July	7 August
6 July to 5 October	7 November
6 October to 5 January	7 February
6 January to 5 April	7 May

The tax return is to be sent by 31 January of the first year after the tax period, just as you would for a Self Assessment tax return, but through your software.

Final thoughts on Making Tax Digital for Income Tax for landlords

MTD for Income Tax is a landslide change for landlords and sole traders. It impacts millions of individuals; some of whom may not even realise they’re running a business and that MTD for Income Tax therefore applies to them.

Because accounting relating to property income can be simply a matter of logging rents alongside any money spent on the property, you might still be using written record-keeping, or a spreadsheet.

The legally enforced requirement to use software may come as a surprise.

Spreadsheets can be used for MTD for Income Tax accounting but are unlikely to be a user-friendly option considering the need to submit regular updates (they can be used elsewhere within your accounting, as required, of course).

Preparation work for Making Tax Digital for Income Tax should begin sooner rather than later.

April 2026 will be here before we know it. Diving head-first into Making Tax Digital for Income Tax when you have no choice is unlikely to be a pleasant experience.

Starting now with your preparations, and getting up to speed ahead of time, will bring the best results for you.

Editor’s note: This article was first published in July 2021 and has been updated for relevance several times to track developments.