MTD for Landlords Earning Under £30,000: What Changes from 2027

Making Tax Digital for Income Tax is changing how many UK landlords keep records and report rental income to HMRC. The key point is that landlords earning under £30,000 are not automatically exempt forever. While the £30,000 threshold matters from April 2027, the threshold falls again to £20,000 from April 2028.

For landlords, the figures are based on gross qualifying income, not rental profit. This means expenses, mortgage interest and other deductions do not reduce the income figure used to decide whether MTD applies.

What is MTD for Income Tax?

Making Tax Digital for Income Tax, often called MTD for ITSA, requires affected landlords and sole traders to keep digital accounting records and send quarterly updates to HMRC through compatible software.

Instead of dealing with rental income and expenses only once a year when preparing a Self Assessment tax return, landlords within MTD must maintain records during the year. They will normally send four quarterly updates and then complete an end of year return through compatible software.

MTD does not create a new tax on rental income. The main change is the way records are kept and information is submitted to HMRC.

The MTD timeline for landlords

This means a landlord with qualifying income of £29,000 in 2025 to 2026 will not be mandated into MTD from April 2027. However, the same landlord could become required to join from 6 April 2028 if qualifying income for 2026 to 2027 exceeds £20,000.

What does “under £30,000” mean?

For MTD, HMRC looks at your total qualifying income. This is your gross income from:

• Property income
• Self employment income
• A combination of property and self employment income

It is not based on your taxable profit.

For example, a landlord receives £32,000 in annual rent and incurs £12,000 in allowable property expenses. Their rental profit is £20,000, but their qualifying income is still £32,000. They would be required to use MTD from 6 April 2027 because their gross qualifying income is over £30,000.

Where a landlord also runs a sole trade, both income streams are added together. A landlord with £18,000 gross rental income and £15,000 self employment turnover has total qualifying income of £33,000. They will fall within MTD from April 2027.

Employment income, pension income, dividends and most investment income do not count towards the qualifying income threshold. However, they may still need to be included in the end of year tax return where relevant.

What changes from April 2027?

Landlords with qualifying income over £30,000 for the 2025 to 2026 tax year must start using MTD for Income Tax from 6 April 2027.

They will need to:

• Keep digital records of rental income and allowable expenses
• Use compatible accounting software or spreadsheets linked through bridging software
• Send quarterly updates of property income and expenses to HMRC
• Complete an end of year return, including tax adjustments and other personal income
• Continue to calculate and pay tax under the usual Self Assessment payment dates

The usual payment deadlines do not change. Income Tax balancing payments remain due by 31 January, while payments on account may still be due on 31 January and 31 July where applicable.

The quarterly updates are not separate tax bills. They are regular summaries of the income and expenses recorded during the year. The final tax position is confirmed after year end when adjustments, reliefs and other income have been considered.

What happens to landlords below £30,000?

A landlord earning below £30,000 of qualifying income in the relevant 2025 to 2026 tax year does not have to join MTD from April 2027.

However, this position is short lived for many landlords. From 6 April 2028, the threshold reduces to over £20,000. This means landlords with gross qualifying income between £20,001 and £30,000 should use 2026 to 2027 figures to assess whether they will be required to join.

Landlords under £20,000 are outside mandatory MTD for the time being, although they can choose to join voluntarily. HMRC will keep the scope of MTD under review, so landlords should continue monitoring future announcements.

Digital records landlords should keep

Good property accounting is no longer just helpful. For landlords within MTD, it becomes central to compliance.

Digital records should clearly track:

• Rent received for each property
• Letting agent statements and deductions
• Repairs and maintenance costs
• Insurance, service charges and ground rent
• Legal and professional fees
• Utilities paid by the landlord
• Advertising and tenant finding costs
• Mileage and travel that is wholly and exclusively for the property business
• Capital expenditure, which must be identified separately from revenue expenses
• Finance costs and mortgage interest

A common issue is treating all property spending as immediately deductible. Some costs are capital rather than revenue expenses. For example, an improvement that adds value or substantially upgrades a property may be treated differently from a repair. Correct bookkeeping during the year helps avoid errors in both quarterly reporting and the final tax return.

Accounting and tax points to consider

MTD makes timely bookkeeping more important, but it also gives landlords a reason to review the tax position of their portfolio more regularly.

Jointly owned properties

Each owner normally reports their own share of property income. The MTD threshold is considered using the individual landlord’s qualifying income, not simply the total rent received by the property.

For married couples and civil partners, income from jointly owned property is generally split equally unless a valid declaration and beneficial ownership evidence support a different split. This needs careful planning and proper documentation.

Mortgage interest relief

Individual residential landlords do not usually receive full tax relief for mortgage interest as a deduction from rental profits. Instead, qualifying finance costs may receive a basic rate tax reduction. This can affect taxable income, tax bands and overall tax planning.

This remains an important area to review before MTD submissions begin, especially for landlords with highly geared portfolios.

Property companies

MTD for Income Tax applies to individuals with qualifying property or self employment income. A limited company holding rental property is subject to Corporation Tax rules instead, not MTD for Income Tax.

However, a landlord may own some properties personally and others through a company. In that situation, personal rental income may still bring the individual into MTD.

Allowable expenses and records

Quarterly submissions do not remove the need for year end tax analysis. Reliefs, claims and adjustments must still be considered properly. Accurate accounting records also support claims for allowable expenses and protect landlords in the event of an HMRC enquiry.

How to prepare now

Landlords below £30,000 should not wait until 2028 to review their systems. Early preparation can reduce disruption and help identify tax issues before reporting becomes more frequent.

• Review gross rental income, not just annual profit
• Check whether self employment income must be added to property income
• Separate income and expenses for each property
• Move away from paper records and unstructured bank statements
• Choose software that suits the number and type of properties owned
• Keep evidence for repairs, improvements, finance costs and professional fees
• Review whether ownership structure remains tax efficient
• Set aside funds for Income Tax and payments on account
• Speak to a property tax accountant before mandatory MTD starts

How UK Property Tax Accountants can help

MTD is more than a software exercise. It is an opportunity to improve property bookkeeping, keep tax records accurate and ensure the right reliefs and deductions are claimed.

UK Property Tax Accountants support landlords with practical accounting, tax compliance and property focused advice throughout the move to digital reporting.

• Review your rental and self employment income to confirm when MTD applies
• Assess whether your gross qualifying income may exceed the £20,000 or £30,000 thresholds
• Set up clear digital bookkeeping processes for each property
• Help select and implement suitable MTD compatible accounting software
• Categorise property expenses correctly, including repairs, improvements and finance costs
• Prepare quarterly MTD updates and end of year tax returns
• Calculate rental profits, tax liabilities and payments on account
• Review mortgage interest relief and other property tax issues
• Advise on jointly owned properties, ownership splits and supporting records
• Provide proactive tax planning for landlords, investors and property portfolios

Frequently asked questions