MTD for Landlords: Your Property Income Guide

Landlords face some unique challenges under Making Tax Digital that do not apply to typical sole traders. If you earn rental income above the £50,000 threshold, you are caught by MTD from April 2026 — and the record-keeping requirements for property income have some specific wrinkles worth understanding.

The fundamental requirement is the same: keep digital records and submit quarterly updates to HMRC using compatible software. But for landlords, the complexity comes from the nature of property income itself. Unlike a sole trader who typically has one business, landlords often have multiple properties, each with its own income and expense profile. Under MTD, you need to maintain records for your property business as a whole, but having clear per-property records is essential for your own financial management.

Rental income recording is straightforward in principle. You record the rent received from each tenant for each period. However, complications arise with deposits, advance rent, rent-free periods, and rent arrears. Under MTD, you need to record income as it arises, not necessarily when the cash hits your bank account. If a tenant pays rent in advance, that income belongs to the period it covers, not the period it is received. Getting this right requires careful record-keeping.

Allowable expenses for landlords include mortgage interest — but this is no longer deductible from rental profits. Since April 2020, mortgage interest relief has been given as a basic rate tax reduction instead. This means you record the full rental profit before mortgage interest, and then claim a 20% tax credit on the interest paid. Under MTD, this needs to be handled correctly in your quarterly submissions. Many landlords still get confused by this change, and incorrect recording is one of the most common errors.

Repair and maintenance costs are fully allowable as long as they are revenue expenditure — meaning they restore the property to its previous condition rather than improving it. A new boiler to replace a broken one is a repair. Upgrading from a basic boiler to a high-efficiency system is an improvement, which needs to be claimed as a capital allowance instead. The distinction matters and needs to be recorded correctly in your MTD-compatible software.

Furnished Holiday Lettings receive special tax treatment, including the ability to claim capital allowances on furniture and equipment. However, to qualify, the property must be available for letting for at least 210 days per year and actually let for at least 105 days. If you have FHL properties, your MTD records need to track availability and letting days as well as income and expenses.

For landlords with a mix of property types — long-term residential, short-term holiday lets, commercial property — each category may have different tax rules. Your MTD software needs to handle this complexity, and you need to understand which expenses relate to which properties and categories.

Software like Accounted handles property income alongside self-employment income, making it straightforward for landlords who also have a sole trade. The quarterly submissions combine all your MTD-reportable income, so you only need one piece of software even if you have multiple income sources.

The practical advice for landlords is: start with a clear schedule of all your properties, tenants, rental amounts, and recurring expenses. Get this into your MTD software well before April 2026. Make sure your mortgage interest is recorded separately from other expenses so the basic rate reduction is calculated correctly. And establish a routine for recording expenses as they happen — a roof repair in October needs to be in your Q3 submission, not remembered six months later.

The landlords who will find MTD easiest are those who already track their property finances carefully. If you know your yield, your void periods, and your maintenance costs per property, you are already doing 90% of what MTD requires. The transition is just about moving from your current system to one that can talk to HMRC.