MTD for UK Landlords

If you earn income from letting property in the UK — whether just one rental flat or an entire portfolio — you need to know about Making Tax Digital (MTD).

This isn’t just about filing your tax return online. It’s a full transformation in how your rental income, expenses, and records must be kept, updated, and submitted — in a structured, digital way.

A common misconception is that MTD is only for big businesses or self-employed individuals. But more and more landlords are already affected— and in the next couple of years, it will apply to most property owners.

Whether you're a UK resident landlord or a non-resident landlord living overseas, MTD will soon impact the way you handle tax.

In this article, we’ll walk you through:

· How MTD applies to landlords

· What types of income count

· What expenses are claimable

· How to deal with joint ownership, overseas properties, and mixed incomes

· What you need to do each quarter

· What software to use

· And most importantly — how we can help you manage the whole transition

Landlord FAQs: Does This Apply to Me?

If you’re earning income from rental properties, then yes — MTD will likely apply to you in the near future.

You may think: “But I’m not a business. I just rent out a flat, do I really need to change how I report tax?”
The answer is: very likely, yes.

Under the new system, you will no longer submit a tax return once a year. Instead, you’ll be expected to submit updates every quarter, and then a final summary at the end of the tax year — all using government-approved software.

Which Income Counts Towards MTD?

This is a key point. Only certain types of income are included in MTD— and you need to understand which ones apply to you.

Income that counts:

· UK property income

· Foreign property income

· Self-employment or sole trader income (freelance, side gigs, small businesses)

Income that doesn’t count:

· Employment income (PAYE)

· Dividends

· Savings interest

· Pensions

So if you receive £25,000 from rental properties and £20,000 from freelance consulting, your MTD-relevant income is £45,000 — and you’re very close to being required to join.

But if you earn £40,000 in rental income and £30,000 in PAYE employment, your MTD-relevant income is only £40,000 — and for now, you may not be required yet.

What If I Own Multiple Properties — Or Overseas Property?

If you have more than one property, your UK rental income is grouped together as one source for MTD purposes.
If you have foreign rental property (for example, in Europe or Asia), that’s grouped separately — but still counts towards the MTD income threshold.

Example:
If you have two UK rental properties bringing in £18,000 per year, and a foreign rental property with £10,000 income, your total rental income is £28,000.
Add in £5,000 from self-employment? Your MTD-relevant income is £33,000.

Yes, you may need to join MTD — just not quite yet.

When Will I Be Affected?

MTD will be introduced in phases based on your qualifying income:

From April 2026, it becomes mandatory if your combined income from self-employment and property exceeds £50,000.
From April 2027, the threshold drops to £30,000.
From April 2028, it is expected to drop further to £20,000.

That means if you’re not affected now — you likely will be soon.
Preparing early gives you the upper hand.

What Changes for Landlords Under MTD?

You’ll need to:

· Keep digital records of all rental income and allowable expenses

· Submit quarterly updates of your earnings and costs

· Complete a final end-of-year statement to reconcile and confirm your tax position

Instead of once-a-year self-assessment, you’ll now be reporting to HMRC five times a year — and you’ll need compatible accounting software to do it.

No more loose spreadsheets or handwritten ledgers.
No more waiting until January to rush everything in.

What Expenses Can You Deduct?

This is where many landlords get confused, especially with digital reporting.

Common allowable expenses include:

· Letting agent fees

· Property repairs and maintenance

· Insurance premiums

· Utilities (if paid by the landlord)

· Loan interest (for qualifying finance)

· Accountant fees

Non-allowable expenses include:

· Mortgage capital repayments

· Home improvements (like building an extension)

· Personal or private expenses

We’ll help you distinguish between what’s claimable and what’s not — and make sure it’s tracked correctly from day one.

Can I Use Excel? What Software Is Needed?

Technically, you can still use Excel — if you link it to bridging softwarethat connects your data to HMRC’s system in a compliant way.

But most landlords will benefit from switching to fully integrated MTD software that handles everything — from expense tracking to direct submission.

We’ll help you choose the right software (not just the “approved” one), get you set up, and train you to use it. Or we’ll handle it for you entirely — whatever you prefer.

Why Start MTD Now?

Most landlords will wait until the last minute — and that’s exactly when mistakes happen.

You don’t want to be figuring out new software and quarterly submissions during tax season chaos.

By acting now, you can:

· Learn how to record expenses properly

· Get your reports in order

· Avoid future penalties

· Build better financial habits

And best of all — you’ll be ready before others even start.

Seek Professional Help

We’re Here to Help You Transition. Elaga Accountancy specialises in supporting landlords with end-to-end MTD compliance — from assessing your income, to submitting your quarterly reports, to year-end finalisation.

Whether you’re a UK-based landlord or a non-resident landlord investing from overseas, we’ve got you covered.

Accountants at Elaga help you to simplify what feels complex. We’ll explain in plain language. We’ll tailor a solution that works for your situation — and you can focus on your property, not paperwork.

Talk to Elaga Accountancy Today

Not sure if MTD applies to you?
Worried about deadlines, systems, or what to report?

Let’s talk it through — clearly, calmly, and practically.
We’ll help you plan ahead, avoid surprises, and make the transition stress-free.

Now is the time to get ready.

***Contact us to learn more.

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