MTD for Landlords: Everything You Need to Know for 2026

If you earn rental income from UK property, Making Tax Digital (MTD) for Income Tax applies to you. From April 2026, landlords with gross property income (or combined self-employment and property income) over £50,000 must keep digital records and submit quarterly updates to HMRC. Here is everything you need to know.

How MTD Applies to Landlords

MTD for Income Tax does not only cover self-employment income. It also covers income from UK property — whether you rent out a single flat or manage a portfolio of houses.

The key question is whether your gross income exceeds the threshold:

• Property income only: If your total rental income before expenses exceeds £50,000, you must comply from April 2026
• Combined income: If you are both self-employed and a landlord, you add your gross self-employment income and gross property income together. If the combined figure exceeds £50,000, you must comply for both income sources

For example, if you earn £20,000 from freelance work and £35,000 from rental properties, your combined gross income is £55,000 and you are in scope.

What Counts as Property Income?

Your gross property income includes:

• Rent received from tenants
• Income from holiday lets (including furnished holiday lettings)
• Ground rents and service charges you receive
• Income from letting parking spaces, storage, or land
• Payments from lodgers (above the Rent a Room allowance of £7,500)

It does not include:

• The sale proceeds from selling a property (that is a capital gain, not income)
• Deposits held on behalf of tenants (unless forfeited)

Remember, it is the gross figure — total rent received before deducting mortgage interest, repairs, insurance, agent fees, or any other expenses.

What You Need to Do

1. Keep Digital Records

All your property income and expenses must be recorded digitally in MTD-compatible software. This includes:

Income records:

• Rent received from each property
• Dates of receipt
• Tenant details (for your own records, not submitted to HMRC)

Expense records:

• Mortgage interest payments
• Insurance premiums
• Letting agent fees
• Repairs and maintenance
• Ground rent and service charges you pay
• Utility bills (if you pay them as landlord)
• Legal and professional fees
• Travel to properties for inspections or maintenance
• Replacement of domestic items (furniture, appliances in furnished lets)

2. Submit Quarterly Updates

You submit four quarterly updates per year summarising your property income and expenses:

| Quarter | Period | Deadline | |---------|--------|----------| | 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 update contains summarised income and categorised expenses for that quarter. Your software submits this to HMRC via their API.

3. File a Final Declaration

After the tax year ends, you file a final declaration (by 31 January following the tax year) confirming your total figures for the year and including any adjustments.

Landlord-Specific Considerations

Mortgage Interest Restriction

Since 2020/21, individual landlords can no longer deduct mortgage interest as an expense against rental income. Instead, you receive a 20% tax credit on your mortgage interest payments.

Under MTD, you still record your mortgage interest payments, but they are treated differently in the tax calculation. Your software should handle this correctly, showing the tax credit rather than an expense deduction.

This particularly affects higher-rate (40%) and additional-rate (45%) taxpayers, who effectively lose relief on their mortgage interest above the basic rate.

Repairs vs Improvements

This is one of the most common areas of confusion for landlords, and it matters even more under MTD because you are categorising expenses quarterly rather than annually.

• Repairs are allowable expenses that reduce your taxable profit. Fixing a leaking roof, repainting walls, replacing a broken boiler with a similar model — these are repairs.
• Improvements are capital expenditure and are not deductible against rental income. Adding an extension, installing a new kitchen to a higher specification, or converting a loft — these are improvements.

The test is whether you are restoring the property to its previous condition (repair) or enhancing it beyond its original state (improvement). When categorising expenses in your MTD software, make sure you distinguish between the two.

Replacement of Domestic Items Relief

If you rent out a furnished property, you can claim the cost of replacing domestic items — furniture, furnishings, appliances, and kitchenware. The relief covers the cost of the replacement item minus any proceeds from selling or scrapping the old one.

You cannot claim for the initial furnishing of a property, only for replacements. And the replacement must be a like-for-like replacement — if you replace a basic oven with a high-end range cooker, you can only claim the cost equivalent to a like-for-like replacement.

Multiple Properties

If you own multiple rental properties, your MTD quarterly updates cover all of them together as a single property business. You do not submit separate updates for each property.

However, it is good practice to track income and expenses per property within your software, even though the MTD submission is consolidated. This helps with:

• Understanding the profitability of each property
• Making decisions about your portfolio
• Providing accurate figures if HMRC queries specific properties

Accounted supports multiple properties within a single account, making it easy to track individual property performance while submitting consolidated MTD updates.

Jointly Owned Properties

If you own a property jointly (with a spouse, partner, or business partner), each owner must report their share of the income and expenses through MTD. The standard split is 50/50 for jointly owned property, unless you have made a Form 17 declaration to HMRC specifying a different split.

Each joint owner needs their own MTD software account and submits their own quarterly updates reflecting their share.

Furnished Holiday Lettings

Furnished holiday lettings (FHLs) have different rules from standard residential lets. To qualify as an FHL, the property must be:

• Available for letting for at least 210 days per year
• Actually let for at least 105 days per year
• Not let to the same person for more than 31 consecutive days for more than 155 days per year

FHL income is treated as trading income for some purposes, which can offer advantages such as full mortgage interest relief and capital allowances on furnishings. Under MTD, FHL income is reported separately from other property income.

Getting Your Records Ready

If you have been managing your rental property records on spreadsheets or paper, you need to transition to MTD-compatible software before April 2026. Here is how:

1. Choose software that handles property income properly. Not all MTD software is designed for landlords — some focus primarily on sole trader self-employment. Accounted supports both.

2. Set up your properties in the software with addresses, tenant details, and rental amounts.

3. Connect your bank account to import mortgage payments, insurance premiums, and other regular costs automatically.

4. Import historical data if possible. Having your previous year's figures in the system helps with comparison and budgeting.

5. Categorise recurring expenses so the software can automatically assign them each month — mortgage payments, insurance, agent fees.

Working with a Letting Agent

If you use a letting agent, they typically provide monthly statements showing:

• Rent collected
• Their management fee (deducted from rent)
• Any maintenance or repair costs paid on your behalf
• The net amount transferred to you

For MTD, you need to record the gross rent (before agent deductions) as income, and then record the agent's fee and any costs as separate expenses. Do not just record the net amount you receive — HMRC wants to see the full picture.

Most letting agents can provide data in a format that can be imported into your software, so ask them about this.

Tax Implications for Landlords Under MTD

MTD does not change how your property income is taxed — it changes how you report it. But the quarterly reporting does have some practical benefits:

• Running tax estimate: You can see your estimated tax liability throughout the year, not just when you file your return
• Better budgeting: Knowing your tax position quarterly helps you set money aside regularly
• Earlier error detection: Mistakes are spotted sooner rather than discovered months later
• Clearer profit picture: Quarterly summaries show you how each property is performing throughout the year

Common Landlord Questions

Do I need separate software for my rental properties and my self-employment? No. Most MTD software, including Accounted, handles both within a single account. You keep separate records for each income source but submit through one platform.

What if I only have one property and the rent is £15,000 a year? If your gross property income is below £50,000 (and you have no self-employment income pushing you over), you do not need to comply until the threshold drops. But voluntary sign-up is available if you want to get ahead.

Can my accountant manage my MTD submissions? Yes. Your accountant can handle everything through their agent services account. You still need to keep digital records throughout the year, but your accountant can review and submit the quarterly updates.

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