Making Tax Digital for landlords: what counts, and what you send
For MTD, landlords count rent before expenses, not profit, and joint owners count only their share. What that means for the threshold, and how quarterly updates work for property.
Many landlords are surprised to find themselves in Making Tax Digital. The reason is usually the same: the test looks at income before expenses. A landlord collecting £32,000 a year in rent, with a mortgage and costs that leave a modest profit, is still over the £30,000 threshold that applies from April 2027.
How the threshold is worked out
HMRC adds together your gross income from self-employment and property on the relevant tax return. For a property you own jointly, only your share counts: a flat shared equally with a sibling that brings in £50,000 of rent gives each of you £25,000 of qualifying income. If you only receive your share after expenses have been deducted, HMRC will use that figure.
From HMRC’s guidance: with £52,000 of qualifying income, this person is above the £50,000 threshold for April 2026.
Show the data
| Rental income | £25,000 |
|---|---|
| Self-employment | £27,000 |
| Qualifying income | £52,000 |
What landlords send
Quarterly updates are summaries of rent received and allowable expenses for each property business: one for UK property and, if you have it, one for overseas property. Mortgage interest is still relieved as a basic rate tax reduction, worked out in your tax return at the end of the year.
Getting ready
- Use one bank account for rents and property costs, so your software can read it.
- Ask your letting agent for monthly statements in a format your software accepts.
- Agree with any co-owners who keeps which records, and how income is split.
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.