Making Tax Digital for Landlords: Thresholds, Dates and How to Prepare

Making Tax Digital for Income Tax, usually shortened to MTD, is now live. Since 6 April 2026, landlords and sole traders whose qualifying income was above £50,000 in 2024/25 must keep digital records and send HMRC an update each quarter. The limit drops to £30,000 from April 2027 and £20,000 from April 2028.

For anyone with a growing portfolio, the real question is when MTD will reach you, not whether it will. Here is how the phasing works, how shared properties are counted, and what is worth doing now.

The phasing

April 2027 is also the month the new property income tax rates of 22%, 42% and 47% begin, so landlords face two changes at once.

What is counted

The test looks at gross income from self-employment and property, before any costs, as shown on your tax return for the relevant earlier year.

• Counted: rent from UK or overseas property you own in your own name, and self-employed turnover.
• Not counted: salary, pensions, dividends, savings interest, partnership profit shares, and rent received by a company.

Because the measure is gross, a landlord with heavy mortgage interest and running costs can fall within MTD while making a small profit. A landlord with £35,000 of rent and £25,000 of costs has qualifying income of £35,000, not £10,000. Three or four buy-to-lets can push gross rent past £30,000 without much difficulty.

The test looks at gross income from self-employment and property, before any costs, as shown on your tax return for the relevant earlier year.

Property you own with someone else

You count your own share of the rent. If a property produces £50,000 and is owned equally by two people, each has £25,000 of qualifying income. The rule is identical for spouses and for other co-owners. Where an agent or co-owner only tells you your share after expenses, HMRC accepts that net figure.

Joint owners also benefit from two easements. You may keep less detailed digital records for jointly let property, and you may leave its expenses out of the quarterly updates and add them before the annual return is filed. You only need records for your own share.

The quarterly rhythm

Each update is cumulative from the start of the tax year.

Calendar periods can suit landlords whose agents report monthly. You must choose them in your software before the first update, and you cannot change for that tax year afterwards.

The annual tax return survives. It is still due by 31 January after the tax year ends, and it is where savings interest, dividends and partnership income are added and where reliefs, including the Section 24 credit, are settled. Payment dates do not change either: balancing payments and payments on account follow the usual Self Assessment calendar.

Penalties

MTD uses a points system. HMRC has said it will not charge points for late quarterly updates in 2026/27, although late tax returns are still penalised. After that, every late submission earns a point, and reaching four points brings a £200 penalty. Late payment penalties and interest are separate and carry on as before.

Companies and partnerships

Companies pay corporation tax and are outside MTD for Income Tax, so rent received by your own company does not count towards your personal threshold. Partnerships are not yet included either, with HMRC promising a timetable later, although an individual partner can still be caught through property or self-employment income held in their own name.

Escaping MTD is rarely a good reason to incorporate. A company brings its own accounts and filings. If a company is worth considering for other reasons, that is the conversation to have.

Why the running totals can mislead

Quarterly updates report income and costs. They do not produce your final tax figure. Several things that matter to portfolio landlords only appear in the annual return:

• the Section 24 credit on mortgage interest, 20% for 2026/27 and 22% from 2027/28;
• the new property income rates and the rule that places property income above salary and pensions;
• brought-forward losses, the personal allowance taper over £100,000 and income from other sources.

Landlords with large mortgages are the likeliest to be caught out. Interest goes into the updates as a cost, but the relief arrives only at the end of the year and at a fixed rate. A sensible habit is to use the first two updates of 2027/28 to re-estimate your bill on the new rates so payments on account are not based on stale numbers.

Myths to drop

• MTD does not mean paying tax quarterly.
• Having an accountant file for you does not remove your obligations. They will need your records every quarter.
• The threshold is not based on profit.
• Joint owners do not each count the whole rent.

Steps to take now

1. Look up your gross property income on the 2025/26 return. Above £30,000 means you are in from April 2027.
2. Run rental income and costs through a dedicated bank account.
3. Pick compatible software, or a spreadsheet with bridging software, and ask your accountant what they support.
4. Decide between standard and calendar update periods.
5. Agree who sends the updates and how records reach them each quarter.
6. Confirm each joint owner's share, and whether a Form 17 declaration means a split other than 50:50.
7. Plan for the new rates and MTD together, since both begin in April 2027.

How our team helps

We are a specialist tax planning and advisory firm, not a bookkeeping service, and we work alongside your own accountant. Where MTD prompts a wider question about how your properties are owned, our specialists review the options on a fee agreed in advance, and the advice is prepared by our specialist team and reviewed by a Chartered Tax Adviser. If you would like a second pair of eyes on your position before April 2027, book a call with our team.

This article is general information, not advice. Tax rules change and their effect depends on your circumstances.

Landlords can find more guides and tools at our specialist practice, Property Tax Advisory.