Making Tax Digital and Limited Company Landlords: What the Rules Mean for You

Does Making Tax Digital apply to limited company landlords?

No. Making Tax Digital for Income Tax Self Assessment applies only to individuals who earn self-employment income or property income in their personal name. A limited company is a separate legal entity and pays Corporation Tax — an entirely different tax that has its own digital filing system, separate from MTD for ITSA.

The distinction is fundamental to UK tax law. When you own a property through a limited company:

• The company — not you personally — is the legal owner
• The rental income belongs to the company
• The company pays Corporation Tax on its profits
• The rental income does not appear on your personal Self Assessment tax return
• Therefore, it is not "qualifying income" for MTD for ITSA purposes

MTD for ITSA is specifically designed for:

• Individuals who are self-employed (sole traders, freelancers, consultants)
• Individuals who personally own rental properties (buy-to-let, HMOs, furnished holiday lets)
• Individuals in a property partnership

Limited companies, partnerships that are themselves companies, and LLPs are not within scope of MTD for ITSA. The April 2026 rules — mandatory for qualifying income above £50,000 — do not touch companies at all.

This means that a landlord whose entire portfolio is held within a limited company structure faces zero additional administrative burden from MTD for ITSA. Their company continues to file its annual Corporation Tax return and accounts exactly as it does today.

What taxes does a property limited company pay?

A property limited company pays Corporation Tax on its profits. The director (you) pays Income Tax on any salary taken from the company via PAYE, and Income Tax at dividend rates on any dividends distributed. Capital Gains are also subject to Corporation Tax at the company level.

Understanding the full tax picture of a property limited company helps clarify why MTD for ITSA is irrelevant to it:

None of the taxes listed above fall within the scope of MTD for ITSA. Your personal Self Assessment return — where you declare your salary and dividends from the company — currently sits outside the MTD for ITSA framework because salary is employment income and dividends are investment income, not self-employment or property income.

The company's annual Corporation Tax return is filed via HMRC's Corporation Tax online service. This system is digital, but it is not the same as MTD for ITSA. It operates on an annual basis, requires submission of full company accounts alongside the CT600 return, and has its own separate compliance requirements.

When could Making Tax Digital affect a limited company landlord?

MTD for ITSA could affect you personally if you also own properties in your personal name (not just through the company) and those personally owned properties plus any self-employment income together exceed £50,000. The company itself remains unaffected.

This is the critical nuance for landlords with mixed structures. Let us work through the scenarios:

Scenario 1: All properties in a limited company, no personal property income

You own no properties in your personal name. All rental income flows through the company. Your personal income is a director's salary and dividends. MTD for ITSA does not apply to you personally for property income. (If your salary exceeds £50,000 as employment income, that does not trigger MTD either — employment income is not qualifying income for MTD for ITSA.)

Scenario 2: Mix of personal and company properties

You personally own two properties generating £35,000 gross annual rent. Your company owns six properties generating £120,000 annual rent. Your personal qualifying income for MTD purposes is £35,000 — the company's £120,000 is irrelevant to your personal MTD assessment. You are below the April 2026 threshold of £50,000, so you are not required to join MTD in 2026. You would join from April 2028 if the threshold drops to £30,000 and your personal rental income remains above that.

Scenario 3: High personal salary, some personal property

You take an £80,000 director's salary from your company. You also personally own one rental property earning £30,000 gross. Your MTD qualifying income is £30,000 (the personal rental property) — not £110,000. Your salary does not count. You are below the April 2026 threshold, though above the April 2028 threshold of £30,000.

Scenario 4: Self-employed and company landlord

You run a sole trader business earning £35,000 and own company properties (ignored for MTD). Your MTD qualifying income is £35,000 — below the April 2026 threshold. If you also personally owned a rental property earning £20,000, your qualifying income would rise to £55,000 — pushing you into scope from April 2026.

The key takeaway: MTD for ITSA looks at your personal qualifying income only. Company income is irrelevant to your personal MTD position.

MTD for Corporation Tax — what is happening?

HMRC has published plans for a future Making Tax Digital for Corporation Tax, but as of February 2026, no mandatory date has been confirmed. The April 2026 MTD rules apply only to Income Tax and do not affect limited companies.

HMRC's long-term ambition is to bring all taxes into the Making Tax Digital framework. For Corporation Tax, the plans are at an earlier stage than the ITSA rules:

• MTD for CT — current status: Under development. HMRC has consulted on the framework but has not confirmed a mandatory implementation date.
• Voluntary pilot: A pilot programme for MTD for Corporation Tax is expected at some point, though specific dates have not been confirmed as of February 2026.
• Mandatory date: None confirmed. HMRC has indicated this will be introduced at some point in the future — but the government has repeatedly pushed back CT digitisation timelines.
• Likely format: When it does arrive, MTD for CT will probably require quarterly reporting for larger companies, with the same general framework as MTD for ITSA — digital records, regular updates, annual final declaration.

For practical purposes, property limited company directors should prepare for eventual CT digitisation but do not need to act on it now. The April 2026 changes simply do not apply to limited companies.

It is also worth noting that HMRC already requires digital filing for most Corporation Tax returns — the shift to fully digital records and quarterly reporting under MTD for CT, when it arrives, will be less dramatic for companies that already use good accounting software. Companies that are not yet using digital accounting software should consider adopting it regardless of MTD for CT timelines, simply for the efficiency and accuracy benefits.

Should landlords incorporate to avoid Making Tax Digital?

Incorporating your property portfolio into a limited company does remove those properties from your personal MTD for ITSA obligation. However, the costs and tax consequences of incorporation are typically far greater than the MTD compliance costs you would avoid. MTD compliance alone is not a sufficient reason to incorporate.

The decision to hold properties through a limited company is one of the most significant financial decisions a landlord can make. It affects your entire tax position, your mortgage options, your estate planning, and your ongoing administrative costs. Let us look at the full picture:

Costs of incorporating existing personally held properties:

The arithmetic is clear: the SDLT, CGT, and mortgage costs of incorporating a portfolio of two or three properties can easily run to tens of thousands of pounds. The annual cost of MTD compliance software is typically a few hundred pounds at most. You would never incorporate purely to avoid MTD.

When incorporation does make sense:

Many landlords have incorporated — or are considering incorporating — primarily for Section 24 reasons. Section 24 restricts mortgage interest deductions for individual landlords, but does not apply to limited companies, where mortgage interest remains fully deductible as a business expense. For higher rate taxpayers with large mortgage interest bills, the Section 24 savings from incorporation can be substantial enough to justify the transition costs.

For landlords in that position, the fact that incorporation also removes those properties from their MTD obligation is a secondary benefit — not the primary driver. If you are considering incorporation, the decision should be made on the basis of Section 24, your overall tax position, your long-term plans for the portfolio, and your estate planning goals — not MTD compliance costs.

Hybrid landlords — personal and company properties side by side

Many UK landlords hold some properties in their personal name and some through one or more limited companies. Each set of properties is taxed entirely separately, and for MTD purposes, only the personally owned properties' income counts towards your personal qualifying income threshold.

This hybrid structure is increasingly common, often arising naturally over time: a landlord buys their first few properties personally, then later incorporates new acquisitions or transfers selected properties into a company after taking tax advice.

Here is how the MTD rules apply to a hybrid landlord:

A practical example: A landlord personally owns three properties generating a combined £42,000 gross annual rent. Their limited company owns eight properties generating £180,000 annual rent. For MTD purposes, their personal qualifying income is £42,000 — below the April 2026 threshold of £50,000. They are not required to join MTD in 2026. If the threshold drops to £30,000 in April 2028 and their personal income is still £42,000, they would then be required to join.

The company's £180,000 in rental income is completely irrelevant to their personal MTD position. It belongs to the company, is taxed under Corporation Tax, and does not appear in their personal Self Assessment return except perhaps as dividends distributed.

Tax differences between personal and company ownership in the MTD era

The choice between personal and company ownership involves significant trade-offs across multiple tax heads. MTD compliance is the least significant of these considerations.

Looking at this table, the MTD column is a relatively minor factor in the overall decision. The Section 24 mortgage interest treatment, the Corporation Tax vs Income Tax rate difference, and the CGT position on disposal are almost always the dominant considerations.

For new landlords or those still building a portfolio, the decision about ownership structure should be made carefully with professional tax advice before acquiring properties — it is significantly harder to change structure after the fact than to start with the right one.

Does a company director's salary count towards MTD qualifying income?

No. Salary paid to you as a director of your property company is employment income. Employment income is explicitly excluded from the MTD for ITSA qualifying income calculation. Only self-employment income and personally owned property income count.

This is an important clarification for director-landlords who take a salary from their property company. The MTD qualifying income test asks: do you have gross self-employment turnover above the threshold, or gross property income (personally owned) above the threshold, or both combined above the threshold?

It does not ask about:

• Employment income (salary)
• Dividend income
• Pension income
• Investment income (interest, savings)
• Capital gains

All of those income types may appear on your Self Assessment tax return and contribute to your overall Income Tax liability — but they do not count towards your MTD qualifying income threshold.

A director-landlord who takes a £120,000 salary from their property company and owns no personal properties has zero qualifying income for MTD for ITSA purposes. They are not in scope for MTD from April 2026, regardless of how much the company earns or how much they personally take out.

This may seem counterintuitive — someone earning £120,000 is not required to join MTD while a landlord earning £52,000 gross from two buy-to-let properties is. But the logic flows from the structure of the tax: MTD for ITSA is about digitising Self Assessment for unincorporated businesses (sole traders and individual landlords). Employed directors have their tax collected via PAYE, which is already fully digital.

Non-resident landlords and limited company ownership

Non-UK resident individuals who personally own UK rental properties are within scope of Making Tax Digital for ITSA if their qualifying income exceeds the threshold. Non-UK resident companies that own UK rental properties pay Corporation Tax and are not subject to MTD for ITSA.

The non-resident landlord position mirrors the resident position in terms of the personal vs company distinction. If a non-resident individual owns UK properties in their personal name, their UK rental income is qualifying income for MTD for ITSA purposes — subject to the same thresholds and the same quarterly reporting requirements.

Non-resident landlords who receive UK rental income without a tax deduction at source do so under the Non-Resident Landlord Scheme (NRLS). Under MTD, non-resident individual landlords in scope would need to comply with the quarterly reporting requirements in the same way as UK-resident landlords. The digital records and submissions must be made to HMRC — the fact of non-residence does not exempt you from MTD compliance on UK-source income.

For non-resident individual landlords, the practical challenges of MTD (setting up HMRC-authorised software, obtaining a Government Gateway account if not already held, managing UK tax affairs from abroad) may make professional representation through a UK agent or accountant advisable.

Non-UK companies owning UK property pay Corporation Tax on their UK rental profits and are entirely outside the MTD for ITSA framework. This is a specialist area where professional advice is strongly recommended in all cases.

How to manage a limited company's property portfolio with LandlordOS

LandlordOS can be used to manage properties regardless of whether they are held personally or through a limited company. The MTD submission features apply to personally owned properties; for company-owned properties, LandlordOS provides management, record-keeping, and reporting tools without the MTD-specific submission layer.

For landlords with company properties, LandlordOS provides:

• Property and tenancy management: Track tenancies, tenants, rent collection, and lease terms across your entire portfolio — whether personally or company owned.
• Income and expense recording: Log all rental income and property expenses by property. Export to CSV for your accountant's CT return preparation.
• Compliance tracking: Monitor Gas Safety certificate renewals, EICR renewals, EPC ratings, and other compliance deadlines — critical for both personal and company-owned properties.
• Document storage: Store tenancy agreements, certificates, invoices, and other documents linked to each property.
• Maintenance management: Log maintenance requests, track contractor visits, and maintain a record of property works for insurance and warranty purposes.

If you have a hybrid portfolio — some properties personally owned (subject to MTD) and some company owned (not subject to MTD) — LandlordOS lets you manage the full portfolio in one place. The MTD quarterly submission tools are available for your personal properties. Your company properties are managed and reported separately, with data exportable for your accountant's CT return preparation.

Starting with LandlordOS is free for portfolios of one or two properties. Sign up free and start building your digital property records today — whether your properties are personally owned, company owned, or a mix of both.