Making Tax Digital for landlords

If your gross rental income plus any self-employment income is over the threshold for your year, you keep digital records and send HMRC four updates a year instead of one Self Assessment return.

Rental income counts towards Making Tax Digital for Income Tax. The figure HMRC measures you on is your gross rental income, the rent before you take off any expenses. That catches landlords who assumed the test was on their profit.

Do you need to use it, and when?

HMRC checks an earlier Self Assessment return and writes to you if you are over the line. The thresholds cover self-employment and property income combined.

Qualifying income over	In this tax year	You must start from
£50,000	2024 to 2025	6 April 2026
£30,000	2025 to 2026	6 April 2027
£20,000	2026 to 2027	6 April 2028

The first group is already in. At £20,000 or less you are automatically exempt. If no letter arrives, it is still your responsibility to check.

The measure is turnover, so a landlord with £55,000 of rent and £20,000 of expenses is judged on the £55,000. Your share of partnership profit does not count. If you started renting out partway through the year, annualise the income yourself. See what counts as qualifying income.

Jointly owned property: you are assessed on your share

Each owner is assessed separately, on their own share. HMRC's example: you jointly own a property with your sibling that generates £50,000 of income, you each take an equal share, and neither of you has self-employment income. Your qualifying income is £25,000, not £50,000.

If you are only told your share after expenses have already been taken off, HMRC uses that after-expenses figure for the test.

Once you are using the service, joint lets get easier rules:

You only create digital records for your share of the income and expenses, and you do not have to link them to the other landlord's.
You can keep less detailed records. One record per income category per update period is enough, and for expenses one record per category per tax year is enough. HMRC's example is a landlord creating one record showing £3,000 of rent for the quarter instead of three monthly records of £1,000.
You can leave the expenses for jointly let property out of your quarterly updates and report them after the tax year ends, by resending your fourth quarterly update before you submit your return.

That last concession covers jointly let property only. Expenses on property you own outright go in your updates as normal.

Mortgage interest is not an expense you can deduct from your rent

Landlords get this wrong more than anything else, and it is not new to Making Tax Digital. If you are an individual landlord paying Income Tax you cannot claim interest on property loans as an allowable expense. Companies paying Corporation Tax still can. The restriction was phased in from 6 April 2017 and has been fully in place since 6 April 2020.

Instead you get a tax reduction worth the basic rate of Income Tax, currently 20%, applied to the lower of:

your finance costs for the year, plus any finance costs carried forward
your property business profits for the year, after any brought forward losses
your adjusted total income, meaning income above your Personal Allowance, excluding savings and dividend income

In HMRC's worked example, Sophia has £52,000 of residential rent, £20,000 of mortgage interest and £9,000 of other allowable expenses. Because the interest is not deducted, her taxable property profit is £43,000 instead of £23,000. She then gets a tax reduction of £4,000, which is 20% of her £20,000 of finance costs.

The reduction cannot create a refund. If it was capped by profits or adjusted total income rather than by your finance costs, the difference carries forward.

The restriction applies to residential property. If a property is not all residential, for example a flat above a shop, the finance costs have to be apportioned. Making Tax Digital therefore treats finance costs as their own category: if you rent out UK residential property you must record whether an expense is a restricted finance cost, even if your turnover is under £90,000 and you are otherwise allowed to categorise your records in less detail.

Rent a Room relief

The Rent a Room Scheme lets you earn up to £7,500 a year tax free from letting furnished accommodation in your own home. The threshold is halved to £3,750 if you share the income with someone else. Below the threshold the exemption is automatic.

You may still have to record that income digitally. You need digital records of your Rent a Room income, and the relief is then applied automatically, if either:

you used Rent a Room relief for your home and also had income from another UK property on your last tax return, or
you had no other UK property income, but the gross income from your UK property was above the Rent a Room threshold on your last tax return

The property allowance

The property allowance is up to £1,000 a year, and if you own property jointly you each get your own £1,000 against your share of the gross rent.

Claiming it does not get you out of Making Tax Digital. If you claimed it on your last tax return you still keep digital records and include the income in your quarterly updates, then claim the allowance at the end of the year. You only escape digital records if the income was below the allowance threshold and you did not have to declare it on your previous return.

UK property and foreign property are two separate businesses

All your UK properties are legally one UK property business, so you do not need separate records for each one, and your share of any jointly let UK property forms part of it. Your software adds it all into a single quarterly update.

All your non-UK properties are a separate foreign property business. Here you do have to create separate digital records for each individual foreign property, and for your share of any jointly let foreign one, though your software then combines those into a single quarterly update.

So a landlord with a flat in Leeds and a flat in France sends two sets of quarterly updates, one per business. Both count towards qualifying income if you are a UK tax resident. If you are not, only the UK property income counts, plus any self-employment income you declared on a UK return. Filing the SA109 residence pages on your 2024 to 2025 return also gives you an automatic exemption for the 2026 to 2027 tax year. That covers that one year only, so you still have to start from the 2027 to 2028 tax year if your qualifying income was over £30,000 in 2025 to 2026. The simpler expense categories allowed below £90,000 turnover do not apply to foreign property income.

This service sends quarterly updates for self-employment and UK property. It does not cover foreign property, and it does not handle the end of year Final Declaration.

Furnished holiday lettings no longer have their own rules

Check this if you run holiday lets, because it changed recently. The furnished holiday lettings tax regime was abolished with effect from 6 April 2025 for Income Tax and Capital Gains Tax.

Holiday let income and gains now form part of your UK or overseas property business and are treated like any other property income. The old exemption from the finance cost restriction is gone, so loan interest on a holiday let is restricted to the basic rate like any other residential let. Capital allowances for new expenditure have gone too, replaced by replacement of domestic items relief.

For Making Tax Digital there is nothing extra to set up. HMRC's guidance says explicitly that your one UK property business includes UK furnished holiday lettings income from April 2025.

What you send, and when

Quarterly updates are cumulative: each runs from the start of the tax year to the end of that update period, so a mistake in an early quarter can be fixed in a later one.

Update period (standard)	Deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May the following tax year

Your tax return is still due by 31 January the following year, so a 2026 to 2027 return is due by 31 January 2028. See quarterly update deadlines and penalties.

If you buy another property

Buying another UK property is not a new income source. It joins your existing UK property business, and you create digital records for its income and expenses from the point you start receiving rent. The same applies to a further property abroad joining your foreign property business.

A property that does not join a business you already have is a new income source, which you tell HMRC about through your online account.

Last reviewed 25 July 2026. This is general information about how Making Tax Digital works, not tax advice. We are not accountants. If your situation is complicated, speak to one, or check the guidance on GOV.UK.

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