Making Tax Digital for Buy-to-Let Landlords: What You Need to Know

Does Making Tax Digital apply to buy-to-let landlords?

Yes, from April 2026 — if your gross rental income exceeds £50,000. This applies to individuals (sole owners and those in partnerships) who earn rental income from UK property. It does not apply to limited companies.

The key figures are straightforward:

• April 2026: mandatory for landlords with gross rental income over £50,000
• April 2028: mandatory for landlords with gross rental income over £30,000
• Below £30,000: voluntary participation — no mandatory requirement currently confirmed

The gross income threshold is the total rent received from all your UK properties combined — before any expenses, mortgage interest, or other deductions are applied. If you own five properties collectively producing £55,000 in annual rent but your mortgage costs and other expenses leave you with a net profit of £10,000, you are still in scope. The threshold is based on money in, not profit.

HMRC treats all your UK residential properties as a single "UK property business." This means you cannot separate your properties to keep individual ones below the threshold. Every pound of rental income from every property you personally own contributes to the same total.

If you also have self-employment income — from running a business as a sole trader, for example — that income is counted separately for MTD purposes. However, if your combined qualifying income (both self-employment and property income together) exceeds the threshold, both income streams must be reported under MTD. For more detail on combined income scenarios, see our guide on Making Tax Digital if you are self-employed and a landlord.

How the MTD threshold works for buy-to-let portfolios

Your qualifying income is the combined gross rental income across all UK properties you personally own. There is no per-property threshold — it is the total that matters.

This catches more landlords than many expect. A portfolio of three or four mid-range properties can easily produce more than £50,000 in annual gross rent even if the properties are not individually high-value. Consider a landlord in the Midlands with three two-bedroom terraces each producing around £800 per month in rent: that is £28,800 per property, or £86,400 combined — well above the threshold.

Here are some worked examples to illustrate how the threshold applies:

The tax year that determines your start date is the one immediately before the MTD year begins. To assess whether you must join from 6 April 2026, HMRC looks at your qualifying income in 2024/25. If your 2024/25 gross rental income exceeded £50,000, you join from 6 April 2026 and report under MTD for the 2026/27 tax year onwards.

If you are close to the threshold — say, earning £47,000 or £48,000 — it is worth monitoring your income carefully. An unexpected rent increase, a new property acquisition, or a void period ending early could push you over the line. It is prudent to start preparing as though you will be in scope.

Importantly, the threshold applies to your qualifying income regardless of what you paid in expenses. Section 24 mortgage interest restrictions, repairs, insurance, and other costs are all deducted when calculating your taxable profit — but none of that affects whether you reach the MTD threshold. Gross income is what counts.

Buy-to-let in personal name vs limited company under MTD

Properties owned in your personal name are subject to MTD for ITSA if your income exceeds the threshold. Properties owned by a limited company are not — the company pays Corporation Tax, not Income Tax, and MTD for ITSA does not apply to it.

This is one of the most commonly misunderstood aspects of MTD for buy-to-let landlords. The key distinction is the legal structure through which you hold properties:

Personally owned properties (sole owner or joint owner):

• Rental income is personal income
• You pay Income Tax on profits
• Subject to MTD for ITSA thresholds
• Income counts towards your qualifying income total

Properties owned by a limited company:

• Rental income belongs to the company
• The company pays Corporation Tax on profits
• NOT subject to MTD for ITSA
• The company's income does not count towards your personal qualifying income

Hybrid portfolios (personal and company ownership):

Many landlords own some properties personally and some through a limited company. In this situation, only your personally owned properties' income contributes to your MTD qualifying income calculation. Your company's rental income is entirely separate and irrelevant to whether your personal MTD obligation is triggered.

For example: if you personally own two properties generating £35,000 gross annually, and your limited company owns four properties generating £90,000 annually, your personal qualifying income for MTD is £35,000 — below the April 2026 threshold of £50,000. You would not be required to join MTD until at least the April 2028 expansion (which lowers the threshold to £30,000).

For a comprehensive breakdown of the limited company position, including what Corporation Tax digitisation plans HMRC has announced, see our dedicated guide: Making Tax Digital and limited company landlords.

What buy-to-let landlords need to report quarterly

Each quarter you submit a summary of your rental income and allowable expenses for that three-month period. You do not submit individual receipts or invoices — just category totals. Your software compiles and submits this to HMRC automatically.

The quarterly update is not a full tax return. Think of it as a progress report that keeps HMRC updated on your property business's financial position throughout the year. The actual tax calculation happens at year-end via your End of Period Statement (EOPS) and Final Declaration.

Here is what is reported in each quarterly update:

Travel expenses to inspect or manage your properties are also allowable. You can claim the HMRC approved mileage rate (45p per mile for the first 10,000 miles in a tax year, 25p thereafter) if you use your own vehicle. Public transport costs are claimable at actual cost. Keep records of all journeys — destination, purpose, and distance or cost.

The quarterly deadlines are as follows. Each quarter ends on the 5th of the month and you have until the 5th of the following month to submit:

Section 24 mortgage interest restriction and Making Tax Digital

Section 24, which restricts mortgage interest deductions to a 20% basic rate tax credit, remains fully in force under Making Tax Digital. MTD changes the reporting mechanism — it does not change what tax you owe or the rules governing allowable deductions.

Section 24 was phased in between 2017 and 2020 and now applies in full. Under the old rules, buy-to-let landlords could deduct mortgage interest directly from rental income before calculating taxable profit. Under Section 24, they can only claim a tax credit worth 20% of the mortgage interest paid — regardless of whether they are a basic rate or higher rate taxpayer.

Here is how Section 24 and MTD interact in practice:

1. During quarterly updates: You enter the full amount of mortgage interest paid during the quarter as an expense in your software. It is recorded in full — not the restricted amount.
2. At End of Period Statement (EOPS): Your software applies the Section 24 restriction to your annual figures. The interest is removed from the expense calculation and replaced with a note of the 20% tax credit you are entitled to.
3. At Final Declaration: The 20% tax credit is applied to your Income Tax liability, reducing the amount you owe.

The practical effect is that MTD does not change your Section 24 tax position at all — it simply records it differently throughout the year rather than all at once in January. Your overall tax bill remains the same.

For higher rate taxpayers — those earning above £50,270 — Section 24 continues to create a significant tax disadvantage compared to the pre-2017 system. Under the old rules, a higher rate taxpayer could deduct mortgage interest at 40%; now they can only claim a 20% credit. This is why many higher rate taxpayers have incorporated their buy-to-let portfolios into limited companies, where mortgage interest is still fully deductible as a business expense. If Section 24 is a concern for your tax position, incorporation is a separate discussion that goes well beyond MTD compliance.

One practical point to note: under the cash basis (which applies to most landlords with income under £150,000), mortgage interest is recorded when paid, not when it accrues. For quarterly MTD updates, this means you record interest in the quarter it is actually paid rather than the quarter it relates to.

Buy-to-let landlords and digital record keeping requirements

From the start of your first MTD tax year, every income and expense transaction must be recorded digitally in MTD-compatible software. Paper records and spreadsheets remain legally acceptable as underlying evidence, but the digital record in your software is the authoritative record for MTD purposes.

Digital record keeping means that each transaction must be entered into your software with at minimum:

• The date of the transaction
• The amount
• The category (rent received, insurance, repairs, etc.)
• Which property it relates to

HMRC does not require you to upload or attach every invoice and receipt to your software records, but you should retain underlying evidence in case of enquiry. Many landlords photograph receipts and store them alongside their digital records — either within their property management software or in a separate document storage system.

Recommended approach for buy-to-let landlords:

The single most effective step you can take to simplify MTD compliance is to maintain a dedicated bank account for your rental business. If all rent comes in through one account and all rental expenses go out of the same account, you have a clean digital trail that matches directly to your property business records. This makes quarterly updates straightforward: import your bank transactions, categorise any that need it, and submit.

Most landlords using property management software like LandlordOS can connect their rental bank account directly via a bank feed. Transactions are imported automatically and categorised based on payee and reference patterns. Rent payments from tenants are matched to tenancies automatically, and regular expenses like insurance direct debits are categorised once and remembered for future transactions.

Retention requirements: You must keep all records for at least five years after the 31 January deadline for the relevant tax year. For the 2026/27 tax year, that means retaining records until at least January 2033. If HMRC opens an enquiry into a specific return, you may need to retain records for longer.

Landlords who are not currently keeping digital records should start now. Migrating years of paper records or spreadsheet data into proper property management software takes longer than most expect. The earlier you establish digital habits, the smoother your transition to MTD will be.

HMO landlords and Making Tax Digital

Income from Houses in Multiple Occupation (HMOs) is treated the same as income from standard buy-to-let properties for MTD purposes. HMO rent counts as UK property income and contributes to your qualifying income threshold in the same way.

HMOs are a popular investment vehicle for landlords seeking higher yields per property, but they do not receive any special treatment under MTD. All rental income — whether from a single-tenant house, a shared property, or a purpose-built HMO — flows into the same UK property business for reporting purposes.

For landlords with a mixed portfolio of HMOs and standard buy-to-let properties, all income is combined when calculating your threshold. There is no separate treatment for HMO income.

HMO landlords should be aware that their properties often generate more transactions per property than single-let properties — multiple tenants paying rent separately, more frequent maintenance and repairs, higher utility costs. This makes good digital record keeping particularly important for HMO portfolios. Software that can track income and expenses by property and by unit (or tenant) is substantially more useful than general-purpose accounting software.

If you operate your HMOs as a business — perhaps with staff, a significant number of properties, or you meet HMRC's criteria for property income being treated as a trade — there may be different tax treatment to consider. Most residential HMO landlords do not meet this threshold and are treated as property investors with UK property income, not traders. If in doubt, seek professional advice.

Holiday let landlords and Making Tax Digital

The Furnished Holiday Lettings (FHL) regime was abolished on 6 April 2025. From that date, former FHL income is treated as standard UK property income — and counts towards your MTD qualifying income threshold in exactly the same way as buy-to-let rental income.

Prior to April 2025, Furnished Holiday Lettings had a distinct tax regime with separate rules on allowable expenses, capital allowances, and pension contribution relief. That regime has now been abolished. All income from short-term furnished holiday lets is now treated as standard UK property income.

This has several implications for landlords who previously had FHL properties:

• Threshold calculation: Former FHL income now counts towards your MTD qualifying income total, alongside any long-term rental income you have.
• Capital allowances: The ability to claim capital allowances on FHL furniture and equipment ended in April 2025. Replacement of furniture is now only claimable under the replacement of domestic items relief, the same as standard BTL properties.
• Pension contributions: FHL income previously counted as relevant UK earnings for pension contribution purposes. That treatment has ended.
• Loss treatment: FHL losses could previously be offset against other income. From April 2025, losses can only be offset against future property income.

If the abolition of the FHL regime pushes your total property income above the MTD threshold — for instance, if your holiday let income was previously separate and is now being combined with your buy-to-let income — you need to assess whether you are now in scope from April 2026.

Landlords who earn significant income from short-term lets (via Airbnb, VRBO, or similar platforms) alongside traditional buy-to-let properties should calculate their combined gross rental income carefully to determine their MTD position.

Making Tax Digital and the buy-to-let tax changes of recent years

Making Tax Digital is a reporting and compliance change — it does not alter the underlying tax rules that apply to buy-to-let income. Section 24, the replacement of domestic items relief, and all other property tax legislation continues to apply exactly as before.

Buy-to-let landlords have faced several significant tax changes since 2017. Understanding how MTD interacts with these changes (or rather, does not interact with them) is important for setting accurate expectations:

Section 24 — mortgage interest restriction: In force in full since April 2020. MTD does not change this. You record full mortgage interest in your digital records; the restriction to a 20% basic rate tax credit is applied at year-end. MTD simply moves some of this recording to quarterly rather than annual.

Wear and Tear Allowance replacement: The 10% Wear and Tear Allowance for furnished properties was replaced in April 2016 by the Replacement of Domestic Items Relief (RDRI). Under RDRI, you can only claim for the actual cost of replacing like-for-like domestic items — not a blanket 10% of income. MTD records RDRI expenditure in the same way as any other maintenance or repair expense. No change here either.

Stamp Duty Land Tax surcharge: The 3% SDLT surcharge on additional residential properties (increased to 5% from October 2024) affects acquisition costs but not ongoing income reporting. MTD is about reporting ongoing income and expenses, not property transactions.

Capital Gains Tax on property disposals: When you sell a buy-to-let property, you need to report and pay CGT within 60 days of completion. This is done via a separate HMRC CGT on UK Property account and is outside the scope of MTD for ITSA quarterly reporting. Property disposals are handled in your Final Declaration at year-end.

The message for buy-to-let landlords is consistent: MTD is a change to how you report, not what you report or how much tax you pay. The tax calculations remain identical; the method of communicating them to HMRC changes from annual to quarterly.

How LandlordOS handles MTD for buy-to-let portfolios

LandlordOS is built specifically for UK landlords, with MTD compliance integrated into the core platform. You track properties, tenants, and finances in one place — and when quarterly submission time comes, your reports are already prepared from your live records.

Here is how the LandlordOS workflow supports buy-to-let landlords under MTD:

Property-by-property tracking: Each property has its own profile, with income and expenses attributed to it individually. This gives you full visibility across your portfolio while keeping the records HMRC requires — even though all UK residential property income is combined for reporting purposes, you need property-level detail for your own management and for any potential HMRC enquiry.

Bank feed integration: Connect your rental bank account and transactions are imported automatically. LandlordOS categorises routine transactions — rent payments matched to tenancies, regular standing orders for insurance or service charges identified and categorised. Manual transactions (cash repairs, agent invoices) are entered easily via the expense log.

Quarterly update generation: At the end of each quarter, LandlordOS compiles your income and expense totals into the format required for an MTD quarterly update and submits directly to HMRC via the official API. No manual data entry into HMRC systems — the submission is generated from your live records.

Section 24 handling: Mortgage interest is recorded in full throughout the year. LandlordOS applies the Section 24 restriction automatically at End of Period Statement stage, converting your recorded interest into the correct 20% tax credit figure for your Final Declaration.

Free tier available: LandlordOS is free for landlords with one or two properties. For larger portfolios, paid plans provide additional features including bulk data import, advanced reporting, and priority support. Sign up free and start building your digital property records today.