MTD for Rental Income: Thresholds, Exemptions and What Landlords Must Do

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) went live on 6 April 2026 for sole-trader landlords with gross property and self-employment income above £50,000. The threshold drops to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. The £10,000 figure that circulated in early HMRC consultations was abandoned in late 2022 and is no longer the relevant number anywhere in the schedule.

If you are reading this in 2026 or later, the question is no longer "will I need MTD?" but "when does it bite for me, and what do I need to do?". This guide answers both, with the full set of exemptions, the edge cases on joint property and furnished holiday lets, and the practical timeline for getting compliant.

The MTD for ITSA threshold schedule

Start date	Gross income threshold	Income reference year	Who is brought in
6 April 2026 (live now)	£50,000	2024-25 self assessment	Sole-trader landlords and self-employed with combined gross income above £50,000
6 April 2027	£30,000	2025-26 self assessment	Next cohort of mid-sized landlords
6 April 2028	£20,000	2026-27 self assessment	Most remaining unincorporated landlords with more than one property

The reference year matters. If your 2024-25 self assessment showed gross property plus self-employment income above £50,000, you are in MTD now (started 6 April 2026), even if your 2025-26 or 2026-27 income dropped below that line. The exit route is to fall below the threshold for three consecutive years and then apply to leave.

Use the official gov.uk MTD for ITSA sign-up checker if you are unsure which year applies to you.

Calculating the threshold: gross, not net

The figure HMRC uses is gross income before any expenses. This is critical for leveraged landlords, whose net profit might look modest but whose gross rents easily cross the threshold.

Worked example: leveraged BTL portfolio

• Four flats at £1,100 pcm each = £52,800 gross rents.
• Mortgage interest: £21,000.
• Other deductible expenses (agent fees, repairs, insurance, council tax voids, accountancy): £8,500.
• Rental profit before Section 24 tax reducer: £23,300.

The landlord's net taxable profit is £23,300, but their gross income for MTD purposes is £52,800. They are above the 6 April 2026 threshold and in MTD from that date.

Combining property with self-employment

If you also have sole-trader self-employment income (consulting, trades, a side business), the two gross figures are added together for the threshold test. A landlord with £35,000 gross rents and £18,000 of consultancy turnover is at £53,000 combined and in MTD from 6 April 2026. Limited company income (whether dividends or salary from your own SPV) is excluded from the calculation, only Schedule D / Class 4 income counts.

Joint property: share-based, not 100%

For jointly-owned property, each owner counts only their share of gross rental income. A married couple owning one property generating £48,000 gross rents jointly counts £24,000 each. Neither is automatically in MTD on that property alone. If one spouse also owns a second property generating £28,000 in their sole name, that spouse is at £52,000 combined and in scope. Form 17 elections to redistribute beneficial ownership between spouses still work as a planning tool.

Exemptions from MTD for ITSA

The exemptions are narrower than many landlords expect. Read this section before assuming you are out of scope.

Permanent statutory exemptions

• Trustees (including bare trusts and discretionary trusts). Trust property income continues to be reported through the trust return (SA900), not MTD.
• Executors and personal representatives handling rental income from a deceased estate.
• Foster carers using qualifying care relief.
• Lloyd's underwriters with non-property Lloyd's income (rarely relevant to a property-only landlord).
• Members of partnerships with a non-individual partner, e.g., a property partnership where one partner is a company or trust.
• Individuals subject to bankruptcy or insolvency proceedings.

Application-based exemptions

• Digital exclusion. You can apply to HMRC if you cannot reasonably use digital tools because of disability, age, very limited broadband access (genuine, evidenced), or other practical barrier. HMRC reviews each application. Approval gives you continued annual self assessment in the old format.
• Religious objection to using digital tools, where genuinely held. Less common but accepted.

What is NOT an exemption

• Being above retirement age is not an automatic exemption (you must apply on digital exclusion grounds).
• "I prefer paper" is not a recognised reason.
• Having an accountant is not an exemption (your accountant just files quarterly on your behalf).
• Holding property through a limited company puts you outside MTD for ITSA, but that is a structural fact, not a granted exemption (the CT600 regime applies instead).
• Non-UK residence is not, on its own, an exemption. Non-resident individuals are in MTD if they are within UK self assessment and over the threshold. Non-resident companies sit outside (they use a different regime entirely).

Special cases

Rent-a-room income

If you let furnished rooms in your main home and gross receipts are within the £7,500 rent-a-room allowance, this income is excluded from the MTD threshold calculation provided you elect the rent-a-room basis. Over £7,500 and electing for the rent-a-room basis, the excess counts. Opting out of rent-a-room altogether (and taxing actual profits) means the full lodger income counts towards the threshold.

Furnished holiday lets and short-stay platforms

The FHL regime was abolished from 6 April 2025. Income from Airbnb, holiday cottages, serviced apartments, and similar short-stay arrangements now sits within ordinary property income and counts towards the MTD threshold. The old FHL-specific advantages (capital allowances, pension contributions from FHL profits, Business Asset Disposal Relief) all ended on the same date.

Overseas property

If you are UK resident with overseas rental income, the overseas property is a separate property "business" for tax purposes. Overseas property income is excluded from the MTD threshold calculation. However, if you cross the threshold on your UK property and self-employment income, your overseas property still needs to be reported, just through the annual final declaration rather than the quarterly updates.

Property losses

Brought-forward property losses do not reduce the gross income figure used for the threshold test. They are applied at the final declaration stage against profit.

Quarterly deadlines and what you actually submit

For a 6 April to 5 April tax year, the four quarterly periods and deadlines are:

Quarter	Period covered	Submission deadline
Q1	6 April to 5 July	7 August
Q2	6 July to 5 October	7 November
Q3	6 October to 5 January	7 February
Q4	6 January to 5 April	7 May
Final declaration	Full tax year	31 January following the tax year

Quarterly submissions are cumulative summary totals of income and expense categories, not full P&L statements. You can adjust prior quarters within the same tax year before final declaration. The final declaration is where Section 24 finance cost relief, capital allowances, brought-forward losses, and other adjustments are applied.

Software requirements

HMRC recognises a list of MTD-compatible software products. Current options popular with landlords:

• Hammock (landlord-specific)
• Landlord Studio (landlord-specific)
• FreeAgent (free for many UK business banking customers, broad small-business suite)
• Xero with a bridging tool
• QuickBooks
• Sage
• Coconut
• 123 e-Filing

Spreadsheets are only acceptable if combined with bridging software that converts your spreadsheet output into a HMRC-compatible API submission. Manual records (paper ledger, Word documents, plain spreadsheets without bridging) are not MTD-compatible.

For a comparison of options specifically for landlords, see our best MTD software for landlords 2026 review.

Penalties

HMRC operates a points-based penalty system for late MTD quarterly submissions. Each missed deadline earns one point. For quarterly filers, the trigger is four points, at which a £200 fixed penalty applies. Further missed deadlines after the trigger each generate another £200. Points reset after 24 months of full compliance.

Late payment penalties on the underlying tax are separate and harsher. From 6 April 2026, the MTD ITSA schedule under Spring Statement 2025 is 3% of the unpaid tax from day 15 overdue, a further 3% from day 30, and 10% per annum running from day 31 onwards. Interest accrues on top from the original due date at a rate set by reference to Bank of England base rate plus 2.5%. The legacy 2%/2%/4% schedule at 31/46/91 days continues for non-MTD income tax and VAT only.

What to do now

1. Find out which threshold year applies. Take your last self assessment (the most recent year HMRC has on file before each new threshold start date) and check it against the schedule above.
2. Pick software and run it for a full quarter in shadow mode before your first mandatory submission. This catches data hygiene issues before they become penalty points.
3. Open a separate bank account for each property or, at minimum, a single rental-only account. Co-mingling personal and rental transactions is the single biggest cause of MTD reconciliation pain.
4. Confirm your accountant's MTD readiness. Most are now set up. A small number still are not, and that is a reason to switch.
5. Plan for the £30,000 and £20,000 drops if you are currently below £50,000. Most multi-property landlords will be in MTD by April 2028 even on a single mortgaged BTL.

For wider context on MTD for landlords, our complete MTD for landlords guide covers the policy history, software choices, and timeline. For quarterly deadline detail, see our MTD quarterly deadlines guide.