Making Tax Digital (MTD) for Landlords

nilocmac

If you receive qualifying income from self-employment and/or property, you’ll be legally required to use Making Tax Digital (MTD) for Income Tax – based on the level of qualifying income – from the following dates:
• April 2026, if your qualifying income is over £50,000 in the 2024 to 2025 tax year
• April 2027, if your qualifying income is over £30,000 in the 2025 to 2026 tax year
• April 2028, if your qualifying income is over £20,000 in the 2026 to 2027 tax year

So my question is hopefully simple. My wife and I rent out a property with Income of roughly £4000 each per year. Is this all the income we need to consider (we don't have to include our PAYE etc)? Is this really aimed at Landlords with multiple properties ?

flaneurs_lobster

Think you are right, the definition of "qualifying income" specifically excludes PAYE income.

What qualifying income is

Your qualifying income is the total income you get in a tax year from self-employment and property. Your total income may come from more than one source of self-employment or property income.

All other sources of income reported through Self Assessment do not count towards your qualifying income, such as income from:

• employment (PAYE)
• your share of profit from a partnership as an individual partner 
• dividends (including those from your own company)
• a State Pension
• private pensions

https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax

DRS1

Just be aware that they look at your GROSS rent so before you knock off any expenses.

artifin123

Only your property or self-employment income counts… you do not need to include PAYE salary, pensions, savings interest, etc. It's not just for landlords who own loads of properties, it mostly hits those with bigger rental collections or who make good money on their own.

TaxSortedUK

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TaxSortedUK

Not sure why this post didn't work last time…Anyway:

Worth adding a couple of extra points that often catch people out:

1. As DRS1 says, it's gross rent that counts - so if your rental income is £4,000 before expenses, that's the figure HMRC uses for the threshold, not your profit after mortgage interest, repairs etc.
2. The threshold is also combined - if you or your wife have any self-employment income as well, that gets added to the property income to work out if you cross £50,000. So a sole trader earning £47,000 with £4,000 rental income would be over the threshold even though neither source alone would be.
3. Joint property income is split between owners, so if you and your wife own equally, you'd each only count £2,000 - which keeps you well under the threshold regardless.

At £4,000 combined you're nowhere near needing to worry about MTD ITSA right now. The thresholds are £50,000 from April 2026, dropping to £30,000 from April 2027.

MPux

This is something a lot of landlords are still confused about. The key thing to understand is that MTD for Income Tax is mandatory from 6 April 2026 if your income from property is over £50,000. You'll need to keep digital records and submit quarterly updates to HMRC instead of one annual tax return. The fines for non-compliance start at £200 and increase the longer you leave it. Worth getting this sorted well before the deadline rather than leaving it to the last minute.

DRS1

And if you are under £50k don't think that is the end of it. From April 2027 the level goes down to £30k and I think it will also go down the next year to £20k (although that may still be up in the air).

LITRG

Just sharing a link to our MTD information hub which may help individuals who are confused about MTD. OP, you may find this section helpful -

Who does Making Tax Digital apply to? | Low Incomes Tax Reform Group

You'll see that whether you must comply with the new rules is based on your gross (before expenses) qualifying income - this is the total of your rental income plus any self employment income. The qualifying income threshold for April 2026 joiners is £50,000 (based on the figures reported on the 24/25 tax return.)

For joint property - it is an individual's share of the income which is relevant.

We've recently uploaded a video to our YouTube channel which covers the basics of the scheme and may also be helpful.

What is Making Tax Digital for Income Tax? - YouTube

FriendlyGuide

The main categories of allowable expense for a UK residential landlord:

• Repairs and maintenance — fixing, replacing like-for-like, redecorating. (Improvements — an extension, an upgrade to something materially better — are capital, not revenue, and don't go here.)
• Letting agent and management fees
• Insurance — landlord buildings, contents, rent guarantee
• Council tax, utilities and ground rent you pay during voids or by agreement
• Accountancy and software costs — yes, your bookkeeping software is deductible
• Direct costs — advertising for tenants, phone calls, mileage for property visits
• Replacement of domestic items — like-for-like replacement of furniture and appliances in furnished lets

Mortgage interest is the special case.

 Since Section 24 fully phased in, residential mortgage interest is not deducted as an expense. Instead you receive a basic-rate (20%) tax credit on the interest. Software that handles landlord tax properly applies this automatically; doing it by hand is precisely where DIY spreadsheet returns go wrong.

None of this list is secret knowledge — it's published HMRC guidance. What an accountant historically provided was the discipline of applying it consistently. A category system does the same job.

I hope that helps.

IanLand

One more wrinkle worth adding to the good answers above: the deadlines are now live, not future. Anyone whose gross qualifying income was over £50k in 2024-25 is already in MTD, and the first quarterly update (6 April - 5 July) is due by 7 August. There's a 12-month grace on penalty points for late quarterly updates, but the requirement to keep digital records applies now, and the year-end return keeps full penalties.

And for joint owners like the OP: it's each person's share of gross rent that counts, so a 50/50 couple with £4,000 total rent are at £2,000 each - a long way from any threshold, including the £20k one in 2028.