Making Tax Digital for Landlords: The Complete Guide (2026)

Making Tax Digital for Income Tax is not solely a sole trader issue. Landlords with significant rental income are included in MTD ITSA from April 2026. This guide covers everything landlords need to know: who is affected, how the new reporting system works, what records must be kept digitally, which software supports property income, and the practical steps to take before the deadline.

Which Landlords are Affected by Making Tax Digital?

MTD ITSA applies to landlords whose gross UK property income — rent received before any deductions — meets the qualifying income threshold.

Threshold	Mandatory from
Over £50,000	April 2026
Over £30,000	April 2027
Over £20,000	April 2028

The threshold is gross rent received, not profit. A landlord with three properties generating £55,000 in annual rent has qualifying income of £55,000 — fully in scope for April 2026 — even if mortgage interest and maintenance costs leave only a modest net profit.

What does not count: PAYE salary, pension income, savings interest, and dividends are all excluded from qualifying income. Only gross self-employment income and gross UK property income are included.

Not sure whether you are in scope? Use our MTD eligibility checker to get a clear answer based on your specific income situation.

What MTD ITSA Means for Landlords

Under the current system, landlords report rental income once a year through a Self Assessment tax return. Under MTD ITSA, this changes to a four-times-a-year reporting cycle, followed by a year-end finalisation.

Quarterly updates

Four times per year, you submit a summary of rental income and expenses to HMRC through MTD-compatible software. These are summaries of your position — not tax payments. The quarterly submission deadlines are:

Quarter	Period covered	Submit by
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

Each quarterly update includes total rent received and your allowable property expenses, broken down by category.

End of Period Statement

At the end of the tax year, you submit an End of Period Statement for your property income. This confirms the year's figures and is where you make annual adjustments — including any claims for the property income allowance.

Final Declaration

The Final Declaration replaces your Self Assessment return. It combines all income sources — property, employment, savings, dividends — into your overall tax position for the year, and the tax due is calculated at this stage. For a complete breakdown of all MTD dates and what each stage involves, see our MTD deadlines guide.

What Digital Records Do Landlords Need to Keep?

Under MTD, all records must be kept digitally — not on paper. This is a new requirement for landlords who currently manage their finances in paper files or basic spreadsheets.

Income records:

• Rent received from each property (date, amount, and property address)
• Any other property income such as service charges, parking, or storage

Allowable expense records:

• Mortgage interest (recorded separately — subject to the basic rate restriction)
• Letting agent fees and management charges
• Repairs and maintenance (receipts required)
• Buildings and contents insurance
• Ground rent and service charges
• Utility bills where landlord-paid
• Accountancy fees related to the property
• Advertising costs for new tenants
• Travel costs related to property management (mileage)

Not allowable as revenue expenses:

• Capital improvements such as extensions or full renovations — these are capital expenditure, not deductible revenue costs
• Personal use costs

Records must be kept for at least five years and ten months from the end of the relevant tax year. For a full guide to HMRC's digital record-keeping requirements, see our records you need to keep guide.

How the Mortgage Interest Restriction Works Under MTD

The restriction of mortgage interest relief to basic rate — introduced gradually from 2017 and fully in effect since the 2020/21 tax year — continues unchanged under MTD. Understanding how this interacts with quarterly reporting is useful.

Under MTD, you record the full amount of mortgage interest paid as an expense during each quarterly update. At the Final Declaration stage, the restriction is applied: only 20% basic rate relief is given on mortgage interest, rather than full income tax rate relief for higher rate taxpayers. MTD does not alter this tax calculation — it changes the reporting frequency and method, not the underlying rules.

MTD Software for Landlords

Landlords need MTD-compatible software that specifically supports property income — not just self-employment. This distinction matters when choosing a platform.

Xero

Xero explicitly supports property income alongside self-employment income, making it the most suitable general accounting platform for landlords — whether you have rental income only or a combination of rental and business income. Xero costs from £16 per month and offers a 30-day free trial. Prices as of April 2026 — check the provider's website for current pricing.

FreeAgent

FreeAgent is primarily designed for freelancers and sole traders, but works well for landlords who also have self-employment income — both income streams can be managed in one place. If you bank with NatWest, RBS, Ulster Bank, or Mettle, FreeAgent is included free with your account. For landlords with property income only and no self-employment, check that your chosen FreeAgent plan covers property income before signing up. FreeAgent costs from £19 per month if paying directly.

Landlord-specific platforms

For landlords without self-employment income, specialist platforms may be better suited than general accounting software:

• Hammock — MTD-compatible accounting designed specifically for landlords
• Landlord Studio — combines property management with MTD-compatible accounting
• Arthur Online — built for portfolio landlords, includes MTD-compatible accounting modules

These tools offer property-level reporting and rental management features that general accounting platforms do not. For a full overview of all software types — including bridging software options — see our MTD software options guide.

Spreadsheet plus bridging software

If you currently manage your rental accounts in a spreadsheet, you can continue doing so and add bridging software to handle the quarterly submissions. Confirm that your chosen bridging tool explicitly supports property income quarterly updates — some bridging products are designed only for self-employment submissions and may not cover rental income.

To find the right option for your situation, use our MTD software chooser.

Practical Steps for Landlords Before April 2026

Step 1 — Check your gross rental income. Review your most recent Self Assessment return, UK property pages, for total rent received. Add any self-employment income if applicable. If the combined figure exceeds £50,000, you must comply from April 2026.

Step 2 — Choose and set up your software. Select MTD-compatible software that supports property income and set it up before April 2026, ideally with enough lead time to familiarise yourself with the interface before the first quarterly deadline.

Step 3 — Convert to digital records. Start recording all rental income and expenses digitally. If you are moving from paper files, work through your current year's records and enter them into the new system before the first quarterly period closes.

Step 4 — Sign up for MTD ITSA. Register through your Government Gateway account. You will need your Unique Taxpayer Reference (UTR) and National Insurance number, and your software must be set up and connected first. HMRC recommends signing up at least a month before your first quarterly update.

Step 5 — Submit your first quarterly update. Q1 (6 April – 5 July 2026) is due by 7 August 2026. Each quarter, log into your software and submit the summary of that period's rental income and expenses.

What Landlords Do Not Need to Worry About

A few common concerns are worth addressing clearly:

• Quarterly updates are not tax payments. Tax is still due at the usual times — 31 January for balancing payments and, where applicable, 31 July for payments on account.
• The mortgage interest restriction is unchanged. MTD changes the reporting system, not the tax rules.
• You do not need to change how you manage tenants. MTD only affects financial record-keeping.
• Overseas property is not included in MTD ITSA — different rules apply to foreign property income.

If you have questions about how MTD applies to your specific circumstances — particularly if you have a combination of rental income, self-employment income, and PAYE earnings — professional advice from a qualified accountant is worth the cost. The rules around combined income, the mortgage interest restriction, and property allowances can interact in complex ways.