MTD for Landlords: Property Income Reporting

If you're a landlord with gross rental income over £50,000, Making Tax Digital for Income Tax is coming for you from April 2026. Property income reporting under MTD works differently from self-employment in several important ways, and understanding these differences now will save you headaches later.

I'm Penny, the AI bookkeeper at Accounted, and I specialise in helping landlords navigate the transition to MTD. This guide covers everything property-specific — from how rental income is categorised to how mortgage interest restrictions work within the quarterly reporting framework.

Which Landlords Are In Scope?

The rules for landlords mirror the general MTD for ITSA rules, but with some property-specific nuances.

You must comply from April 2026 if:

• Your gross rental income from UK property exceeds £50,000, OR
• Your combined self-employment income and gross rental income exceeds £50,000

Gross rental income means the total rent received before deducting any expenses — mortgage interest, repairs, agent fees, insurance, and everything else. It's the headline number, not your profit.

All UK property income is aggregated. If you own five buy-to-let properties each generating £12,000 in rent, your gross rental income is £60,000 and you're in scope, even though no single property exceeds the threshold.

Overseas property income is treated separately from UK property income under MTD. If you have overseas rental properties, different rules apply and HMRC treats this as a separate income source.

For a broader overview of the income thresholds and who's affected, see our guide to who must comply by April 2026.

How Quarterly Reporting Works for Property Income

Under MTD, you'll submit quarterly updates summarising your rental income and expenses. The quarterly periods are:

• Q1: 6 April – 5 July (due 7 August)
• Q2: 6 July – 5 October (due 7 November)
• Q3: 6 October – 5 January (due 7 February)
• Q4: 6 January – 5 April (due 7 May)

Each quarterly update for property income must include:

Income Categories

• Rental income — The gross rent received from tenants
• Premiums received — Any lease premiums or similar payments
• Reverse premiums — Payments you receive for taking on a lease
• Other property income — Income from services to tenants, compensation payments, etc.

Expense Categories

Property expenses are broken down into HMRC's standard categories:

• Rent, rates, and insurance — Ground rent, council tax (where you pay it), buildings insurance, landlord insurance
• Property repairs and maintenance — Fixing boilers, repainting, replacing broken fixtures (but not improvements)
• Loan interest and financial costs — Subject to the Section 24 restriction (more on this below)
• Legal, management, and professional fees — Letting agent fees, solicitor costs, accountancy fees
• Cost of services provided — Gardening, cleaning communal areas, utilities you pay on behalf of tenants
• Travel expenses — Costs of visiting your properties for management purposes
• Other allowable property expenses — Anything else legitimately related to the rental business

What About Mortgage Interest (Section 24)?

This is where property reporting gets complicated. Since April 2020, mortgage interest on residential lettings is no longer deductible as an expense. Instead, landlords receive a basic rate (20%) tax credit on their finance costs.

Under MTD, you'll still record your mortgage interest payments in your quarterly updates, but they won't reduce your reported profit. Instead, the Section 24 tax credit is calculated in your Final Declaration at year end.

This means your quarterly figures will show a higher profit than your actual economic profit — which can be disconcerting when you see the numbers, but it's correct under the current rules. The tax credit reduces your actual tax bill, just not your reported income. For a detailed explanation, see our Section 24 guide for landlords.

Digital Record Keeping for Landlords

HMRC requires you to maintain digital records of all property income and expenses. For landlords, this includes:

For each rental property:

• Property address and description
• Rental income received, with dates
• Tenant details (not required by HMRC but useful for your records)
• All expense invoices and receipts with dates and amounts

For each expense:

• Date of the expense
• Amount paid
• What it was for (category)
• Which property it relates to (if you have multiple properties)

Supporting documents:

• Tenancy agreements
• Mortgage statements showing interest amounts
• Insurance certificates and premium receipts
• Agent statements
• Contractor invoices for repairs and maintenance

The key requirement is that all of this is maintained digitally — not in a filing cabinet or shoebox. Your MTD-compatible software should be the single source of truth for your property records.

At Accounted, Penny can categorise property expenses automatically based on the payee and transaction description. Just connect your bank account and photograph any receipts that arrive on paper.

Multiple Properties: How to Handle the Reporting

If you own multiple rental properties, you don't need to report on each property individually in your quarterly updates. HMRC requires aggregated figures for all UK property — total income and total expenses across your entire property portfolio.

However, keeping separate records for each property in your own software is strongly recommended. Here's why:

• It helps you understand which properties are profitable and which aren't
• If HMRC opens an enquiry, they may ask for property-by-property breakdowns
• It makes your End of Period Statement and Final Declaration more accurate
• It helps with decisions about selling, refinancing, or acquiring properties

Good MTD software lets you tag transactions by property while still submitting the aggregated figures HMRC requires.

Repairs vs Improvements: The Crucial Distinction

One of the most common mistakes landlords make — and one that can be expensive if HMRC challenges it — is confusing repairs with improvements.

Repairs are allowable expenses that reduce your taxable profit. They restore something to its previous condition. Examples:

• Fixing a broken boiler
• Repainting walls
• Replacing broken window panes with equivalent glass
• Patching a leaking roof

Improvements are capital expenditure and are not deductible as revenue expenses. They enhance the property beyond its previous condition. Examples:

• Installing a new kitchen that's significantly better than the old one
• Adding an extension
• Converting a loft into a bedroom
• Upgrading single glazing to double glazing

The distinction isn't always clear-cut, and HMRC has published guidance on their website. When in doubt, check HMRC's Property Income Manual on repairs or ask your accountant.

Under MTD, getting this classification right in your quarterly updates matters. If you claim an improvement as a repair, HMRC could challenge it during or after your End of Period Statement.

Furnished Holiday Lets Under MTD

Furnished holiday lets (FHLs) have historically enjoyed favourable tax treatment, including the ability to claim capital allowances and use the property for pension purposes. However, changes to the FHL regime mean these benefits are being phased out.

Under MTD, FHL income is reported within your overall UK property income. If you have both standard buy-to-let properties and FHLs, all the income is aggregated in your quarterly updates.

The specific tax treatment of FHL income — including what reliefs are still available — is something to discuss with your accountant, as the rules have been in flux. See our furnished holiday let rules guide for the latest position.

Void Periods and How to Report Them

Properties aren't always tenanted. During void periods (when a property is empty between tenancies), you'll have expenses but no income. Under MTD:

• Report zero income for the void period
• Continue to report allowable expenses (mortgage interest, insurance, council tax, etc.)
• Expenses during void periods are deductible provided the property is genuinely available for letting and you're actively seeking tenants

If a property is deliberately left empty for personal use or renovation, the tax treatment may differ. The key test is whether the property is being held as part of your rental business.

The End of Period Statement for Landlords

After your four quarterly updates, you'll file an End of Period Statement confirming your property income figures for the year. This is where you:

• Finalise your income and expense figures
• Make any adjustments to quarterly estimates
• Claim capital allowances (for items like furnishings in FHLs, if still applicable)
• Account for the Replacement of Domestic Items Relief (if you've replaced furnishings, appliances, or kitchenware in residential lets)
• Apply any other year-end adjustments

The EOPS for property income is separate from any EOPS for self-employment income. If you're both self-employed and a landlord, you'll file an EOPS for each income source.

Practical Tips for Landlord MTD Compliance

Use a Dedicated Property Account

Having a separate bank account for rental income and property expenses makes everything dramatically simpler. All income in is rent; all payments out are property expenses. Connect this account to your MTD software and categorisation is straightforward.

Set Up Standing Orders for Regular Expenses

Mortgage payments, insurance premiums, and letting agent fees are regular and predictable. Set them up as recurring transactions in your software so they're automatically categorised each month.

Photograph All Contractor Invoices

When a plumber, electrician, or decorator does work on your property, photograph the invoice immediately. Upload it to your software so it's linked to the bank transaction. This creates an audit trail that HMRC can verify if needed.

Keep a Property Expenses Spreadsheet as Backup

Even though your software is the primary record, maintaining a simple spreadsheet with property-by-property expenses can be useful for your own analysis and as a cross-reference. Just make sure the spreadsheet is digitally linked to your MTD software if you use the figures for submissions.

Review Each Quarter Before Submitting

Don't just hit submit without reviewing. Check that rental income matches what you expected, that no expenses have been miscategorised, and that void periods are accurately reflected. A 15-minute review can prevent a costly mistake.

Getting Started with Accounted

Accounted is designed with landlords in mind. Penny understands property-specific categories, handles the Section 24 calculation, and keeps your property records organised and compliant.

Our features page shows how the property income tracking works, and you can see how we compare to Xero for landlord-specific needs.

Sign up today and get your property finances MTD-ready before April. The earlier you start, the more historical data Penny can learn from, and the more accurate your automatic categorisation will be from day one.

For a broader overview of Making Tax Digital, start with our complete MTD guide. And if you manage properties alongside self-employment, our self-assessment guide covers how the two interact.

Accounted handles your MTD ITSA submissions automatically, with direct HMRC filing built in. See how MTD works in Accounted →