How gross rental income is calculated, when Making Tax Digital applies to landlords, and what you need to report quarterly. Everything UK landlords need to know about MTD-ITSA compliance.
Does MTD Apply to Rental Income?
Yes. If you’re a landlord in the UK and your gross rental income exceeds the MTD threshold, you must comply with Making Tax Digital for Income Tax (MTD-ITSA).
From 6 April 2026, the threshold is £50,000 of gross rental income. This drops to £30,000 in April 2027 and £20,000 in April 2028.
But here’s what confuses many landlords: it’s based on gross rental income (total rent received), not profit after expenses. A landlord with £55,000 in annual rent but only £15,000 profit after mortgage, repairs, and other costs still exceeds the threshold.
If you’re caught by MTD, you’ll need to:
- Submit four quarterly updates per year
- Keep digital records of all rental income and expenses
- File an End of Period Statement (EOPS) annually
- Submit a Final Declaration (replacing your Self Assessment property pages)
This guide explains exactly how MTD works for landlords, what counts toward the threshold, and what you’ll need to report.
MTD Thresholds for Landlords: 2026-2028
The income threshold determines whether MTD applies to you. It drops over three years:
2026/27 Tax Year (from 6 April 2026)
Threshold: £50,000 gross rental income
Who’s caught:
- Landlords with £50,000+ in total rent across all properties
- Buy-to-let portfolios generating £4,167+ per month in rent
- Holiday let operators with £50,000+ annual bookings
Who’s exempt:
- Landlords earning under £50,000 gross rent
- Those with rental income but also qualifying exemptions (age, disability, etc.)
2027/28 Tax Year (from 6 April 2027)
Threshold: £30,000 gross rental income
Additional landlords caught:
- Medium-sized portfolios (e.g., two properties at £1,250/month each = £30,000)
- Part-time landlords renting out a second home
- Those who were just under £50,000 but are now caught
2028/29 Tax Year (from 6 April 2028)
Threshold: £20,000 gross rental income
Additional landlords caught:
- Single property landlords charging £1,667+/month
- Smaller portfolios and holiday lets
- Most active landlords will be in scope at this point
What if You Have Self-Employment AND Rental Income?
Your combined gross income from self-employment and property rental determines MTD eligibility.
Combined Income Calculation
Example scenario:
- Self-employment income: £28,000
- Rental income: £24,000
- Combined total: £52,000
Result: You exceed the £50,000 threshold for 2026/27 and must comply with MTD.
Even though neither income source alone exceeds £50,000, the combined total triggers MTD.
How Combined Income is Reported
You’ll submit two separate income streams in your quarterly updates:
- Self-employment income (Box 1: Business Income)
- Property income (Box 2: Property Income)
Your MTD software calculates the combined total automatically when generating quarterly updates.
Should Landlords Use a Managed MTD Service?
Many landlords find MTD burdensome on top of property management. A managed service handles:
What’s included:
- MTD software setup
- HMRC registration
- Quarterly updates prepared and filed
- Year-end EOPS and Final Declaration
- Proactive deadline reminders
- Tax-efficient advice (e.g., ensuring mortgage interest relief is maximised)
Typical cost: £100–£200 per quarter for landlords with 1-3 properties.
When it makes sense:
- You have multiple properties
- You’re also self-employed (complex combined income)
- You’ve missed tax deadlines in the past
- You’d rather focus on property management than tax compliance
Action Plan for Landlords
If You’re Over the Threshold Now
This month:
- Calculate your exact gross rental income for 2024/25
- Choose MTD-compatible software and sign up
- Register for MTD with HMRC
Next month:
- Set up your properties in the software
- Connect your bank account (if you use a dedicated rental account)
- Import opening balances as of 5 April 2026
Before 6 April 2026:
- Practice generating a quarterly report
- Set calendar reminders for all four deadlines
- Establish a receipt/invoice capture process
If You’re Close to the Threshold
Monitor your income:
- If you’re at £45,000–£49,000 now, rent increases could push you over
- Plan for the £30,000 threshold in April 2027
- Consider voluntary MTD registration to get ahead
Get prepared:
- Start using MTD software even if not required yet
- Build good digital record-keeping habits
- Understand the process before it’s mandatory
If You’re Well Below the Threshold
Stay informed:
- The threshold drops to £20,000 in April 2028
- Many single-property landlords will be caught at that point
- Start preparing 12 months before you expect to cross the threshold
The Bottom Line for Landlords
Making Tax Digital applies to rental income if you exceed these thresholds:
✓ 2026/27: £50,000+ gross rent
✓ 2027/28: £30,000+ gross rent
✓ 2028/29: £20,000+ gross rent
It’s based on total rent received, not profit after expenses.
If caught, you’ll submit four quarterly updates per year, keep digital records, and file an annual End of Period Statement and Final Declaration.
The process isn’t optional. Penalties start at 1 point per missed deadline, with fines kicking in at 4 points (£200+).
Start preparing now:
- Calculate your gross rental income
- Choose MTD software
- Register with HMRC
- Set up digital record-keeping
Or consider a managed service to handle it all for you.
Book a free landlord MTD consultation we’ll calculate your threshold position and give you a clear action plan.
Call: 03301 332 533
About This Guide
Written by the MTD Compliance Team at MakingTaxesDigital.com — UK accountants specialising in MTD for landlords and property investors. We manage MTD compliance for over 200 landlords across the UK.
Questions? Email hello@makingtaxesdigital.com or call 03301 332 533
Last updated: 5 February 2026