Making Tax Digital for landlords

The gross rent trap

This is the part that catches most landlords. The MTD threshold is based on gross rents received, not on the profit you actually pay tax on.

A landlord with three properties producing £36,000 of rent, £22,000 of mortgage interest and £6,000 of running costs has a taxable profit of £8,000 after the Section 24 restriction, but £36,000 of qualifying income. They are in MTD from April 2027.

If you own property in your own name and your rents total more than £30,000, assume you are in from April 2027 until an accountant tells you otherwise.

Jointly owned property

For jointly owned property, each owner counts only their share of the gross rent. A couple jointly letting property producing £50,000 of rent each have £25,000 of qualifying income, below the April 2027 threshold.

Joint owners also get a relaxation on expenses: you can report income only in your quarterly updates and add the expenses once, at the final declaration.

Multiple property businesses

UK property, furnished holiday lets and overseas property are separate income sources requiring separate quarterly submissions. A landlord with UK rentals and a Spanish apartment files eight quarterly updates a year, not four.

All UK residential and commercial property is a single UK property business, however many properties it contains.

What landlords should do now

Work out your gross rents for the relevant lookback year. Get records into software that connects to HMRC. A spreadsheet plus bridging software is fine. Get into the habit of coding transactions monthly rather than annually, because a quarterly deadline does not forgive a shoebox.