Making Tax Digital for landlords

HMRC's measure for Making Tax Digital is gross self-employment and property income before any tax allowances or expenses are deducted. For a landlord that means the total rent and other property income on the property pages of the return. Letting agent fees, repairs, insurance and mortgage interest come off later when profit is worked out, but they do not reduce the figure that decides whether you are in. Because the measure is taken before any tax allowances, we read it as meaning the £1,000 property allowance does not reduce the figure either; that is our interpretation of HMRC's wording.

The result is that a landlord with several properties but modest margins can be caught well before their profit suggests. Someone whose gross rents on their 2025 to 2026 return were more than £30,000 will need to join from 6 April 2027 even if their profit after costs was far lower. Our guide to how rental income is taxed explains how the profit itself is calculated, and the mortgage interest tax relief guide covers finance costs.

Where property is owned jointly, GOV.UK says your share of the property income counts towards your qualifying income. Its example is property income of £50,000 split equally with a sibling, which gives each owner qualifying income of £25,000. Each owner then adds any other property or self-employment income they have personally, so two people who own the same flat can end up with different start dates.

GOV.UK also says that if you only learn your share after expenses, for example from a statement prepared for all the owners, that figure is the one used.

Joint landlords get some relief from the record keeping rules. You only need digital records for your own share of the income and expenses, and you do not need to link your records to the other owner's. If you jointly let property, you can choose to:

• create a single digital record for each category of property income covering each update period
• create a single digital record for each category of property expense for the whole tax year
• leave expenses for jointly let properties out of your quarterly updates

If you take the last option, you add those expenses before you submit your tax return. Expenses for any property you own outright still have to go into your quarterly updates in the normal way.

GOV.UK says that if you have an agent who deals with your record keeping, they can do this on your behalf. In practice many landlords receive a monthly or quarterly statement from a letting agent showing rent collected and fees deducted, and the question is who turns that into digital records. Agree it in writing before the first quarter starts, because GOV.UK is clear that you remain legally responsible for your own tax even when someone else acts for you.

Corrections are made in your digital records and carried into the next update, and GOV.UK allows an adjustment to a category total rather than editing each transaction. That helps when an agent's statement arrives late or is revised.

If you were UK resident, both UK and foreign property income count towards qualifying income. If you were not UK resident, UK property income counts but foreign property income does not. Anyone whose 2024 to 2025 return included the SA109 residence and remittance pages is automatically exempt until April 2027 at the earliest, and our exemptions guide lists the other cases. Check too that any software you choose supports every type of property income you have.

Find your last return, add up your share of gross rents and any self-employment turnover, and compare the total with the thresholds above. If you are in, or about to be, the Making Tax Digital checklist sets out the steps, and our Making Tax Digital service page explains how landlords use accountants for some or all of the quarterly work. This guide is general information and not tax advice.

If you would like a hand, get in touch with a few details about your lettings; we read every enquiry and, where we can, will put you in touch with a local accountant.